Pensions News: April 2010

June 29th, 2010 by JCB
Posted in Pensions News | No Comments »

PENSIONS NEWS

The Secretariat

Benefit Statements 2009:The benefit statements for 2009 were sent out during the first quarter of 2010 (a bit better than last year!) and there were no significant changes that need to be mentioned.

Tax Code Changes : Pensioners and widows should be receiving their 2010/11 tax code changes.  If you have not received a notification then in all probability your tax code has not changed.  For some reason HMR&C has been advising pensioners and widows to check that we are not deducting national insurance contributions (NICs) from their pensions.  Why they have this bee in their bonnet is beyond me as a pensions payroll is by definition only subject to income tax deductions, so just ignore this bit of scaremongering.

A.V.C.s Benefit Statements: Loretta is in the process of checking the 2009 annual A.V.C. benefit statements received from our A.V.C. providers and these should be sent out to you in the near future.  If in receipt you have any queries please contact Loretta at Loretta@pnpf.co.uk.

P60s: As I write Loretta is busy stuffing the 2009/10 P60s into envelopes due to be sent out to all pensioners and widows in the next week or two.

Trustee Annual Report & Accounts 2009: The annual accounts for 2009 are in the process of being audited by our auditors, PKF, and it is hoped to have these as well as the Trustee’s annual report signed off at the May 2010 quarterly meeting.  I will then arrange for them to be printed and sent out to members, hopefully during the month of June.

Expatriate Pensioners: The campaign to treat all expats state pensions equitably has received another blow as the European Court has ruled against uprating the U.K.’s state pension for all expatriate pensioners regardless of their country of residence.  Around 500,000 U.K. pensioners who have spent years paying their national insurance contributions do not receive annual increases to their basic state pension.  Whether they get the increase or not  depends on which overseas country they have decided to reside in.

2010 Budget Special: On 24 March 2010 the Chancellor presented his 2010 budget and although not earth-shattering it did affect some aspects of pension provision.

Restrictions on pension’s tax relief: The budget confirmed the government’s intention to restrict tax relief on pension contributions for high earners.  Individuals with income above a floor of £130,000 are potentially liable.  The restriction on tax relief will be assessed through an individual’s self-assessment tax return and dealt with through a recovery charge. It is expected that this change will affect around 300,000 taxpayers and could undermine the U.K.’s long established approach to pensions taxation by creating uncertainty as to whether it “pays to save” in a pension.

Lifetime and Annual Allowance: The lifetime and annual allowances are to be frozen at their 2010/11 level of £1.8m and £255,000 respectively.  Both are due to remain at these levels until at least the 2015/16 tax year.

Default Retirement Age: The default retirement age of 65 is to be reviewed but no changes will be made before April 2011.

Trivial Pensions: Further consideration is to be given to simplifying rules on commuting trivial pensions by allowing couples to combine their pension pots to achieve better value when purchasing an annuity.

Pension Policies: One of the worst kept secrets has been confirmed and the general election date is to be 6 May 2010.  So what are the pensions’ policies of the political parties?

Conservatives – the Tories have confirmed support for auto-enrolment; restoring the link between state pensions and average earnings; ending the requirement to purchase an annuity at age 75; capping public sector pensions above £50,000; bringing forward the date at which the State pension age starts to rise to 66 to 2016 for men and 2020 for women and reversing the affects of the abolition of the dividend tax credit for pension schemes.

Liberal Democrats – the LibDems want to merge the basic state pension and state second pension into one; make the National Employment Savings Trust (NEST) more attractive to the general public by making it more flexible and restoring the earnings-link to State pensions which would include the abolition of contracting out.

Labour –  their manifesto pledge is to raise basic state pension in line with earnings rather than prices by 2012 subject to affordability and fiscal position, but by 2015 at the latest, getting rid of the default retirement age of 65 and  introducing more flexibility to make it easier for companies to run good pension schemes.

Debbie Marten