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11

Fidelity urges Osborne not to 'chip away' at employer sponsorship

Open-access content Thursday 19th November 2015 — updated 9.20pm, Wednesday 6th May 2020

Fidelity International has called on chancellor George Osborne to use his Autumn Statement next week to defer the tapered annual allowance, which is due to take effect in April 2016.

Richard Parkin, the company's head of retirement said: "We would urge the chancellor to give employers a break and postpone the introduction of a tapered annual allowance.
"This policy doesn't just impact City fat cats but also hardworking business people and professional public servants."

Mr Parkin said the rules around the allowance were complex and had "introduced significant uncertainty and additional costs not only for the individuals affected but also their employers and pension plan trustees".

The pensions system depends on employers' co-operation but they are becoming "increasingly weary of continuous changes to pensions… it is not reasonable to expect they will stay committed to sponsoring and operating good quality pension schemes if they are forced to endure and pay for constant change".

The tapered annual allowance measure is designed to restrict pensions tax relief for individuals with an income (including the value of any pension contributions) of more than £150,000, and those with an income of £110,000 excluding pension contributions.

It was intended to control the cost of pensions tax relief and help make this affordable, the government said at the time the allowance was proposed in July.

Mr Parkin said the chancellor had already flagged further changes to incentives in the 2016 Budget, which are expected to be radical and affect high earners, taking effect by April 2017.

This made it "unreasonable to expect employers and pension plan trustees to introduce and operate" the taper when it was likely to be in operation for only one year, he said.
"Employer sponsorship is the rock on which the UK's pension provision is built. We cannot keep chipping away at it and expect the system to not fall down," Mr Parkin added.

This article appeared in our November 2015 issue of The Actuary.
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