News update – Cash is likely lifetime limit buffer

Giving employees extra cash is likely to be the most popular alternative to pensions for employees that are affected by the lifetime allowance limit.

Over two-thirds (67%) of respondents to a survey by consultancy firm Watson Wyatt reported that they were considering this option.

Two-thirds of employers that had already made a decision about which alternative to offer, meanwhile, said that they would pay for personal financial advice for executive staff.

Unfunded unapproved retirement benefits schemes (UURBS), top-up arrangements where the employer sets up a trust to avoid tax, was the second most popular alternative, which was under consideration by 36% of employers.

Employee Benefits Pension Research 2004 also shows that funded unapproved arrangements (FURBS) are expected to be popular.

Some 30% of executives affected by the lifetime limit will be offered Furbs if they reduce or opt out of pension provision.