July 9th, 2010
The Government announced plans yesterday to effectively reduce the value of millions of pensions in payment by linking them to the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). So what does this mean and who will it affect?
Whilst much of the reporting has used the terminology ‘private pensions’ the announcement has no impact on individual or group stakeholder or personal pensions (collectively known as ‘defined contribution’ or ‘moneypurchase schemes’). Members of these schemes will continue to choose the level of increase (if any) appropriate to them at retirement.
The change, proposed by Pensions Minister Steve Webb, would reduce payments from the following arrangements: state pensions, final salary or ‘defined benefit’ schemes and public sector schemes.
The announcement was welcomed by companies still operating final salary schemes as the smaller increases on pensions in payment could reduce the liabilities they face - although a technical quirk suggests that this may not be the case: many schemes match future liabilities in the gilt market and gilts currently match RPI and are not set up to offer a CPI increase and so may not be able to provide any saving to scheme trustees.
EBS’ MD, Joe Walsh, will shortly be attending a function in Westminster ‘Pensions in a new Parliament’ at which Pensions Minister, Steve Webb is guest speaker - we will keep you informed of any developments via the website.
If any of your employees raise questions regarding these changes please feel to refer them to our website or your usual EBS Consultant.
Posted in business |
June 23rd, 2010
Download our Budget Summary guide here
Speak to your regular contact at EBS for a personal summary of how the Emergency Budget may affect you. The following provides a simple summary of yesterday’s announcements:
Tax & National Insurance
- The basic personal allowance will increase to £7,475 from 6th April 2011
- The basic rate tax threshold will reduce to restrict the benefit of the increased personal allowance to lower earners
- Subsequent reviews will work towards increasing the personal allowance to £10,000
- April 2011’s 1% increase in NI contributions will still apply though the impact on employers will be reduced by the creation of an increased secondary threshold
- The impact can be reduced by using salary sacrifice
- From midnight on 22nd June 2010 a new 28% rate of Capital Gains Tax applies to individuals paying higher rates of income tax. This may warrant of a reviewof the most suitable product wrappers to hold collective investments
- ISA limits will increase annually in line with inflation from 6th April 2011
Pensions & Retirement Planning
- A full review of pensions tax relief from 6th April 2011 has been announced. The anti-forestalling measures introduced last year which run until 5th April 2011 still apply
- It is expected that the review will recommend a reduced annual allowance for pension contributions which would preserve some entitlement to higher-rate tax relief on pension contributions for all. (Analysts anticipate an allowance in the region of £30,000-£45,000 pa)
- From April 2011 the rule requiring pension scheme members to purchase an annuity by age 75 will be reviewed and has been extended to age 77 effective immediately to cover the review period
- As expected it was announced that action will be taken against trusts and similar arrangements used to reward employees and avoid income tax & national insurance. It was confirmed that this action includes Employer Financed Retirement Benefit Schemes, also referred to as Employee Benefit Trusts, from April 2011
- References to the National Employment Savings Trust (NEST) suggest that the Coalition will progress with auto-enrolment of employees into pension arrangements
- Higher rate pension tax relief at some level remains available for everyone until 5th April 2011, speak to EBS for personal information
Every care has been taken to ensure that this information is correct and in accordance with our understanding of the law and HMRC practice, which is subject to change. This has been provided for information only and should not be construed as advice. EBS will publish a more detailed summary of the 22nd June 2010 Emergency Budget on this site and can provide a personal assessment of the Budget’s impact on request.
Download our Budget Summary guide here.
Posted in business, individuals |
May 6th, 2010
Having recently renewed our own insurances for buildings, contents, liability etc we were surprised to be asked as part of the process what measures our Board have taken to help reduce stress levels within EBS!
It was explained to us that the economic downturn will impact employees’ home and work lives and worried employees can make mistakes which give rise to an insurance claim or lead to absence or even illness.
Employers taking proactive steps to reduce this risk and provide support for their employees will benefit from cheaper insurance as well as creating a more supportive working environment.
Part of our solution was to provide an Employee Assistance Programme (EAP) which supports employees with information, guidance, advice and even one to one counselling on a range of areas in the workplace and at home.
When included as part of a death-in-service, income protection or private medical insurance scheme the cost of the scheme does not become a P11d benefit and can be made available to employee dependants.
If you would like more information or EBS to obtain terms for any of your risk benefit schemes, with or without an EAP bolt-on scheme, please get in touch. As independent financial advisers we have access to the entire marketplace to secure the best terms available.
Posted in business |
May 6th, 2010
The Income Tax changes announced last year became effective for the first time this month seeing many employees lose their Personal Allowance (resulting in a marginal rate of Income Tax of 60%) as well as many others paying the new 50% rate of tax.
Awareness of these changes still remains extremely low (as we reported on this site last month) but the pain is starting to be felt. One small piece of good news is that these employees do still have potential options available to reduce the impact of these changes.
EBS offers tax clinics (on a group or 1:1 basis) to educate employees and provide them with a range of choices to minimise the impact. Having run a series of events for SAP (UK) we were delighted to receive this feedback from HR:
“Thanks for delivering the tax clinics, I have to say that ultimately demand far exceeded our initial expectations so we are glad that we made these available to our people. Thanks also for delivering what was ultimately very complex & not great news for some people in a simple and pragmatic manner.”
To find out how we can help your higher rate tax paying employees, Contact EBS.
Posted in business |
