Net pay pension problems? – don’t leave them to the Treasury

Are the Treasury really bothered?

The headline is misleading, the Treasury are not looking for solutions, they are looking for the long-grass ;  unless people who give a damn , tell the Treasury to pull their finger out, 1.7m low earners will continue to overpay their pension contributions by 25%.

The 1.7m in question have no idea what they are missing and have no voice. You can be their voice by responding to HMT’s call for evidence.

Scroll to the bottom of the blog for details of how- better still – read the blog first!

Exposing the five myths the Treasury depend on

Myth one1.7m low-earning people are missing on tax-relief. This is wrong, you get tax-relief when you pay tax and the 1.7m do not pay income tax. They have been promised an incentive to save which amounts to 25% of their personal contributions and they are not getting this incentive because their employer put them in the wrong kind of pension scheme. The incentive to save is theirs by right and has is not tax-relief.

Myth two there is no easy solution to this problem. The low income tax group have put forward a simple solution to this problem using the P800 year end sweep up. The Treasury are failing to engage with this solution which relies on real time information putting up a variety of excuses about this being too expensive. The independent estimates for the implementation of the P800 solution are a paltry £10m – chicken feed to HMRC

Myth threethis is too hard in the time of the pandemic. HMRC have excelled themselves through the pandemic showing a can do attitude which is precisely what they are not showing at the moment.

Myth four this will all come out in the wash when HMT reforms pension tax-relief. Whatever Rishi Sushak does in November (including not having an autumn budget) there is no certainty that pension tax relief will be reformed and no certainty that those reforms will solve the net pay problem. The Treasury are keen to link tax-relief reform to not having to do anything for now on net-pay, but there’s nothing shaking on the tax trees right now.

Myth fivethere’s no point in responding to this consultation. There is nothing that the beastly taxman would like more than you to sit on your keyboard and not respond. That would give them the perfect excuse to put the consultation in the “one for tomorrow” draw.

There is no justice like social justice

HMRC recently published 10 year strategy includes these brave words.

HMRC are likely to evolve as an organisation central to our UK national resilience and crisis response, as well as discharging their traditional role as a tax authority. For this they need to maintain the trust and consent both of taxpayers and of the wider public. There is much evidence from around the world that modernisation can help to build that trust and consent.

If you are thinking of responding to the Treasury, then please remind them that the people who have been hardest by COVID-19 are the people who have least in the way of financial resources. They figure largely among the 1.7m missing out on their promised incentive.

There is a natural bias in pensions to reward the wealthy and take the poor for granted. Auto-enrolment is supposed to include all workers and a great number do get the incentive. But 1.7m is a very large number to be missing out on an extra £6 per month in the pay packet and if that doesn’t sound very much to you, you clearly earn too much!

The government would welcome responses to this call for evidence by 11pm
on 13 October 2020.

 Responses can be sent to:

Pensions and Savings Team
HM Treasury
1 Horse Guards Road


Or if you don’t have a printer or can’t get to the postbox. You can email




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Net pay pension problems? – don’t leave them to the Treasury

  1. Adrian Boulding says:

    I think it’s wrong to call them “low earners”. They should be referred to as part-time workers, because that is what they are. All full timers, whether on low pay or not, are tax payers and so fine in net pay schemes. The simple fact is that the system discriminated against part timers, which is illegal. Because many part-timers are women with caring duties, it also indirectly discriminates by gender. Yes, we should all respond to this consultation.

  2. Eugen N. says:

    Agree to respond, and it is clear an injustice against some of the people on very low income.

    How would this solution with P800 will work? My view was that this tax relief could be returned to the member in March every tax year through the Payroll if they were will the same employer every year.

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