UK - Tax simplification will come at a cost to schemes and administrators, Gissings Advisory Services warns.
The firm pointed out the Treasury’s move to cut legislation and regulation through the much-vaunted tax simplification paper would have a short-term cost on the industry.
Managing director Paul Clark said: “The good news is that we have lost a lot of legislation and regulation, but there is a cost in that we have to invest in the short-term to simplify ongoing administration.”
The £1.4m savings cap will have a long-term administration saving for larger DB schemes, which previously had to deal with the earnings cap.
But he said there would be a transition cost because of the vast amount of calculations involved.
He added that there would be an additional bout of expenditure in 2010 – the proposed date for raising the early retirement option from 50 to 55.
He explained: “The proposals will make day-to-day life simpler but involve a large amount of investment.”
And Clark said that while statutory money purchase illustrations for DC members were “a great idea” there was “a very short amount of time” to make changes to them.
He said: “In terms of best practice, the SMPI should include a range of projections – a single figure is misleading and will require an explanation each year about the change [in pension value].
“You also might want to produce a more realistic projection for those members approaching retirement,” he added.
A suite of liability driven investment (LDI) indices has been launched by STOXX and RiskFirst to aid trustees and consultants select, monitor and challenge managers.
British Airways and the trustees of one of its pension schemes are set to argue over the purpose of a pension scheme, leading to an impactful judgment for DB pensions. James Phillips explores the issue
Bank of England governor Mark Carney has said there is still a lot of data to consider before the Monetary Policy Committee (MPC) can decide when to next hike interest rates.
Savers are not squandering their tax-free lump sums under Freedom and Choice but are taking a more cautious approach to retirement, according to Prudential research.