Partner Rebecca Benneyworth Training Consultants
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So what is the cost / benefit balance?

25th Jun 2009
Partner Rebecca Benneyworth Training Consultants
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I have spent much of this week reading about the latest developments in the pensions forestalling legislation (do I need to add the word "fiasco" or is that a tautology?) The debates in Committee seem to have lasted for about two thirds of a day and not really moved the Government on - skimming to the end of a substantial printout most amendments seem to have been eventually withdrawn. (Yes, sorry planet I printed it to read on a plane. Then promptly dozed off.) The House of Lords Economic affairs Committee didn't make much of it, and I was struck repeatedly by the thought that this is an awful lot of effort to go to, chasing how much tax??

The HoL Committee seemed to think the yield was zero - maybe because lots of people won't do something so no tax will be raised.... The Government (or was it HMRC) says that the introduction of additional complexity isn't much of a problem because "hardly anyone will be affected", so we're doing this WHY? If hardly anyone is affected, how much would it cost to leave it alone? There were 230,000 earning more than £150,000 the last time anyone counted (a couple of years ago). So chop a few off for redundancies and no bonuses in the banking sector. Then subtract the retired on massive pensions - that excludes a certain FG and probably a few others. Now subtract everyone on post A day enhanced protection - got to be quite a few at this level (surely they're not now earning £50 a week?). Knock off those who don't believe in pensions (or don't any more after Equitable Life) and those already contributing at least £245,000 a year. How many left. About 10 I suspect.

Please tell me that someone did a cost / benefit analysis before embarking on this little game. Surely it's not to give people something to do over the summer?

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By nickja
06th Jul 2009 11:56

Come on Rebecca,.......
....I was reading yesterday that the top 5%, I seem to remember, of earners take 25% of the tax breaks for pensions. It seems to me to be entirely fair that the benefit of these breaks is redirected more equitably among the population at large and that almost any measures to achieve that objective are justified. This particular measure may not be the way to do it but the endless pragmatism of "why bother" isn't an acceptable position to adopt.

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By Andy3T
06th Jul 2009 13:30

Separate forestalling not required
I've been told the 5%:25% figures by the Treasury, so understand the policy shift - most people on £150k+ are unlikely to rely on govt benefits in the future so do not, from the govt's point of view, need to be encouraged to save. We should probably be grateful that they will still get basic rate relief

I think that Rebecca's point though related to the forestalling regs which will last for 1 year only, not to the proposed 2010 legislation - a lot of effort for what looks like a minimal return.

The issue of more pension changes coming so soon after 'A' day 'settled matters' is a separate rant...

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By Rebecca Benneyworth
10th Jul 2009 13:13

Yes, I was really only referring to the forestalling
I don't have the slightest problem with a policy that says this or that group may or may not benefit from tax help. Clearly nobody in their right mind will save under a system that taxes them at marginal rate on savings which have not been subject to marginal rate relief and I would expect anyone on this sort of income to be able to take advice from a competent adviser to establish this.

It is the waste of time and money in bringing forward anti forestalling measures which will (a) affect only a few, and (b) be by definition a temporary change, and (c) are very complex and therefore onerous to those who have to understand them in order to advise the few affected by them. I really cannot believe that the cost to the nation in GDP used up messing about with this lot is worth it. My vote would have been to crack on and focus on the change, bringing that in as soon as possible - surely next tax year is not beyond possibility - and more likely to be possible if we weren't spending so much time and effort mucking about on the anti forestalling. Very bad policy call in my view.

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By nickja
14th Jul 2009 12:11

Apologies.......
Now I see clearly what you were trying to say. In which case, apologies for the initial comment.

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