Simplified pensions to be unveiled
18 March 2004
The government is to take major steps to simplifying the pensions system today.
The Finance Bill 2004 will replace the current system's complex rules and regulations with a single lifetime allowance for the level of tax saving, will limit the amount of tax privileged pension saving.
In response to concerns expressed in consultation, the government will legislate in the Bill to implement the simplified regime in April 2006.
This should allow employers and providers sufficient time to implement the full benefits of simplification, setting the level of the lifetime allowance so that it rises steadily up to 2010.
In response to the proposed changes, Sue Bartlett, a partner at Watson Wyatt, commented:
"The additional year's delay to April 2006 will allow more time for employers to prepare for the pensions simplification changes in a holistic way, taking into consideration its effect on all their employees.”
"Despite the delayed implementation date, we urge employers to continue pressing ahead with their preparations. A deadline of April 2005 was extremely tight, but even with this extra year, this will remain a major and time-consuming exercise for many employers."
Mary Francis, Director General of the Association of British Insurers, said: "The good news on saving is that the chancellor has confirmed the government's plans to simplify the complex and unwieldy tax regime governing pensions.
“The new system will be better for savers and for the pensions industry."