Survey reveals that pension tax is too complex for three-quarters of firms
11 November 2019
The Association of Consulting Actuaries (ACA) has conducted a survey which has highlighted that most employers find the matter of pension tax highly confusing and have urged that it should be simplified. Current convoluted laws are discouraging both employees and their employers from contributing for retirement.
Any amendments to the standing pension tax structure should focus on assisting lower income groups, with two-thirds of respondents stating that this is necessary, even if it has a detrimental effect on other groups. The idea of eradicating the Tapered Annual Allowance was favoured by 69% and this was regardless of whether this meant a reduction to the general annual allowance or not.
The survey included 308 businesses of differing sizes and 44% of them reported that the current restrictions had resulted in employees exiting company pension schemes, which is a substantial increase from the 30% recorded last year.
Many companies admit that they have gone to external professional bodies for advice to assist in understanding the current complex tax rules. Similarly, employees may also have to employ specialists to assist with their tax returns, which obviously all comes at a cost, meaning that companies and individuals have less to invest into retirement schemes for the future.
Accountancy Age reports that the ACA’s chair, Jenny Condron stated “The present complexity results in some individuals being put off saving for retirement. Further, many key decision-makers within businesses have opted out of involvement in their company pensions due to their individual pension tax positions.”
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