The coalition government’s plans to simplify higher rate tax relief on pensions could affect more employees than Labour’s plans, according to employers polled by Mercer.
A poll of 350 HR and pension managers and compensation and benefit specialists conducted by the consultancy found 50 per cent of companies believe the new government proposals will affect more employees than the previous government’s plans.
The research found that 60 per cent thought that the proposals were better that the previous government’s approach, while 20 per cent thought they were no different and the remainder thought they were actually worse.
The data shows 50 per cent believed that more of their employees would be affected by the latest proposals compared to 15 per cent who thought that fewer employees would be affected.
Two thirds of schemes have yet to decide if they would change their pension scheme in light of the new regulations, compared to 6 per cent who say will be changing their scheme and 30 per cent who say they will not.
Participants were also asked if their pension scheme had the ability to pay the tax on behalf of a member by reducing benefits and, if so, would they offer this facility to all affected employees or just those required by law? Seventy-four per cent hadn’t thought about the issue yet, while 17 per cent wouldn’t offer the facility to all, and 8 per cent would.
Roger Breeden, principal at Mercer says: “Of more concern is the 35 per cent who stated that they hadn’t investigated if their employees would be more or less affected by the proposals. Companies are potentially required to have taken action on this very complicated issue by April 2011, less than six months away. While the detail has yet to be ironed out, companies should be preparing. Turnaround time following publication of the government’s intentions will be very, very tight.”