UK - Inland Revenue proposals for pension tax simplification will add "unwelcome complexity", industry experts warn.
The Actuarial Profession questioned why the draft regulations – published for industry consultation – were so “weighty” if they were meant to signal “simplification”.
Deputy chairman of the Profession’s Pensions Board, Gordon Sharp (pictured), said: “For ordinary scheme members the new regulations should be easier to understand.
“But behind the scenes, the raft of proposals mean a great deal of unwelcome complexity for scheme advisers and administrators.”
Mercer Investment Consulting senior research actuary Deborah Cooper agreed. She said it was essential the measures were “put right” both in terms of pension provision and regulation of the industry.
She added: “The detail should have been in the legislation of the Finance Act – not added in these subsidiary regulations and any future sub-clauses.
“The early indications are that a number of these recommendations will not tie up with other legislation and need further adjustments.”
Mercer said revenue recommendations that trustees of defined contribution schemes notify members of benefit entitlement at least six months before retirement, would clash with new department for work and pensions legislation. This states that members only have to notify trustees of their retirement two months prior to the date.
The Society of Pension Consultants welcomed the fact industry consultation, which lasts until November, was being carried out. But it, too, has concerns, particularly the use of Financial Services Authority comparative tables to calculate income drawdown.
SPC legislation committee chairman Ian Long said: “Schemes will need a clear understanding of how exactly these regulations flesh out the Finance Act. It is not just a case of what information the Revenue requires but ensuring penalties are not unintentionally incurred by existing schemes making minor changes to arrangements.”
Sacker & Partners said the postponement of A-Day from 2005 to 2006 gave schemes “welcome breathing space” to implement the changes. But the law firm still “highly recommended” a focus on the possible implications on individual scheme arrangements.
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