Pensions earned while at work

The worry in the papers is that people will stop saving for their pension in retirement because they won’t be getting the same perks from April 2029. The promotion of workplace pensions as a cheap way of accumulating wealth is rotten and against the principal of a Government who have made it clear they are about increasing pensions not private wealth. The CDC initiative and the other default retirement options that will from 2027 need to be opted out of, mean that the Government has succeeded in changing the emphasis of “workplace pensions” back to pensions earned while at work.

This is a crackdown on tax advantages grabbed over the past 20 years by DC “pension” schemes which have been hi-jacked by wealth management for those who have no need for pension being wealthy anyway. The losers in this are those who need pensions when they stop working and they have been offered little to replace annuities (however poor they were to DC savers).

The money that will be saved will be substantial, the immediate headroom it gives this Government (the OBR five year cycle takes us past 2029) means we have money that can be put into growing the company and ensuring the poorest are better looked after, the NHS strengthened to reduce the queues. We do not need to encourage the wealthy with NI breaks to save for wealth for themselves and to pass on to wealth to their estate when they die.

The three year delay in implementation is in recognition of the way salary sacrifice has embedded itself in employer taxation strategy

In guidance published late on Thursday, HMRC said it expected the measure to affect 290,000 employers operating salary sacrifice arrangements

The unravelling of payroll systems and the adaption of HMRC to a new means of ensuring NI dodging doesn’t become a feature of “reward” is already a focus for HMRC.

If they are right, these costs will be tiny compared with the £4.7bn HMRC expects to earn in 2029 tax year.

The tax authority forecast one-off costs for businesses of £20mn and an extra £30mn a year for administration of the changes, with changes to HMRC’s own systems expected to cost “in the region of £1.9mn”.

That is chicken feed to the HMRC and not a major cost for payroll managers or reward strategists. It will undoubtedly be blown out of all proportion by those whose job has been to save employers money in tax saving and here we come to the future strategy of HR and reward departments who can either pay up or bring deferred (pension) pay down. Either way, this will be seen as a tax on corporate wage bills. It is a time for employers to decide whether pensions are a part of reward strategy or a nuisance. This will define the type of employer you are, I hope it will lead to a review by ordinary people of how they are being treated when it comes to workplace pensions.

We cannot go on with those with pensions from a pension system that has passed retiring with pensions for their lives from work while those they leave behind struggle with pots and no pension. We must do the things that Pension Schemes Bill demand and return pensions to workplace pensions.

Workplace pensions were a looming cashflow problem for this and future Governments.

We are expected to worry about the 62% tax band that those earning £100,000 are paying as they get hit by loss or reliefs but this really is a worry for the few and one that I find few lose sleep about.

I am 64 and close to retirement, I want to save for my remaining years knowing I am going to be getting the comfort of pension and not the problems of wealth. The promotion of pensions over wealth outweighs the fact that I and my staff will lose a perk in three and a quarter years time.