NAPF: Pension tax reform ten times more expensive than expected
Representative group predicts high implementation costs
The Government’s new tax proposals for pensions is likely to cost ten times
more to implement than government estimates, a peak workplace representative
group said.
NAPF, which speaks for 1,200 pension schemes with some 15 million members and
assets of around £800 billion, criticised the government’s planned overhaul of
tax relief surrounding pension schemes.
The body said the reforms would further undermine tax saving in the UK and
would be costly to implement, up to a total of £3bn, compared to government
estimates of £265m-to-£305m.
“These complex proposals are likely to cost ten times more to implement than
estimated by the Treasury and clearly fail to meet the Government’s own Better
Regulation principles,” the body said in a statement.
HR consultants Mercer described the reforms as “a smash and grab” by the
government.
Deborah Cooper, Mercer’s head of retirement resource group, said if pension
schemes are no longer perceived as tax efficient for high earners, “the
incentive to provide more general employer-sponsored pension savings will be
reduced, and could lead to further cutbacks in what is available to employees”.
“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”.
Read more about the government’s plan:
Implementing
the restriction of pensions tax relief