UK - Flexible benefit experts have welcomed a raft of government measures which will help firms reward employees and promote savings.
Hewitt, Bacon & Woodrow says the changes will enable employers to promote flexible pensions drawdown and pay arrangements.
The consultant also welcomed tax breaks on company childcare provision and company vans – and anticipates further growth on the back of pensions tax simplification in April 2006.
Senior human resource consultant Phil Murray said: “Simplification would generate a continued growth of flex as a key ingredient for employers wanting to maximise employee engagement in years to come”.
Hazell Carr Pensions Consulting head of actuarial services Alan Smith agreed.
“The changes will provide more opportunities for employers to reward employees, and for employees to save, in a tax-efficient manner.”
Industry experts say key measures outlined by Chancellor Gordon Brown (pictured) which affect the flexible benefits market are:
A-Day delay which gives existing flex providers more time to consider creative ideas around new options for benefit accrual and life assurance denomination – a measure particularly necessary for high earners.
The provision for flexibility in drawdown of pensions. Hewitt says, as the retirement boundary becomes fuzzier, flex offers the mechanism to alter an employee’s income for an orderly progression to full retirement.
A new tax break on childcare provision of up to £50 per week to be introduced from April 2005. Flex plans should review the terms to make maximum use of the exemption, while reviewing the continuation of provision above the exemption.
Consultants say the separate treatment of workplace nurseries will need careful attention.
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