Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • January 2015
01

Pension tax changes forcing firms to review reward packages

Open-access content 5th January 2016

A third of companies are revising their benefit packages for higher earners due to new restrictions on the amount people can pay into their pensions per year tax free, a PwC survey has found.

2


Of the 130 firms polled, 26% would be reviewing the role of pensions for all employees as a result of changes to annual and lifetime allowances. 

From April 2016, the current £40,000 annual limit will be reduced to £10,000 for those with an annual gross income of more than £210,000. This will come in the form of a taper as announced by chancellor George Osborne in his July budget statement.

This is based on total income, which includes earnings from other non-employer-related sources such as property. PwC calculated that anyone earning more than £90,000 a year could potentially be affected by the changes.

The firm also said the limit would act as "a further catalyst" for companies to close their defined benefit (DB) schemes. Three in 10 of the companies that provide DB pensions were considering closing future accrual for scheme members. 

More than a third (35%) had decided to implement cash allowances. For the companies that have closed to new entrants, but remain open to accrual, half were in discussion to offer cash allowances. 

Those with defined contribution (DC) pension schemes were also considering their options. One in two were in discussions to offer cash as an alternative to their affected employees, while 42% considered restricting contributions to prevent their employees breaching the annual allowance threshold.

Philip Smith, head of defined contribution pensions at PwC, said pensions would play a "much smaller role in the reward packages" of higher earners in the future. 

"This could have a knock-on effect for all employees, as a significant proportion of decision makers will be disenfranchised from pension saving. Over the long-term this cannot be a good thing," he said. 

This article appeared in our January 2015 issue of The Actuary.
Click here to view this issue
Filed in:
01
Topics:
Pensions
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Longevity Actuary – Reinsurance

London (Central)
£100,000
Reference
118949

Senior Capital Actuary

London (Central)
£90000 - £110000 per annum + + bonus + benefits
Reference
118965

Capital Project Actuary

£500 - £850 per day
Reference
118964
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200