Changes will be made to pensions tax legislation at the beginning of the next parliament, according to Chancellor Alastair Darling’s 2010 Budget.
These changes will enable the national employment savings trust (Nest) to operate as a registered pension scheme; remove tax on interest charges on late contributions made by employers to qualifying pension schemes; and amend the tax rules on unauthorised borrowing by registered pension schemes.
Previously announced changes to tax relief for pensions contributions for those earning over £130,000 a year remain unchanged. (see also: Budget 2009: Tax relief on pensions for high-earners to be reduced)
Eleanor Dowling, a principal in Mercer’s retirement, risk and finance business, said: “We are extremely disappointed the government has failed to listen to the industry regarding the vast expense and complexity of the proposals for restricting higher rate tax relief on pensions.
“We completely support the government’s aim to provide a tax system that is fair, affordable and sustainable, but these proposals are contrary to all of those aims.
“Mercer, and the majority of industry bodies, proposed a workable alternative route to achieving the government’s aim of restricting tax relief for very high earners, which would maintain a coherent tax relief system, minimise additional industry and scheme costs, and ensure xecutives remain invested in good quality pension provision for employees at all levels.”