Is this the Future for UK Pensions?

HONG KONG - May 2, 2014 - PRLog -- There are big changes coming for the way UK pensions will operate. New think tank, the Centre for Policy Studies (CPS), marks out the future for pensions. This influential group’s policies in the past have become the governments’. policies before.

The CPS report shows the government has wasted 350 Billion GBP on pensions tax relief.

The report, entitled Costly and Ineffective: Why Pensions Tax Relief Should be Reformed

Mark Johnson, who wrote the report, recommended the following:

No more 25% lump sum allowed
An end to the Lifetime Allowance (no LTA)
ISA and pension products should share an annual combined contribution limit of £30,000
Pension pot should be passed on to spouse or named beneficiary upon death free from taxation
No tax on dividends (well a 10p rebate to be precise) Instead these should be replaced by:
Tax relief on pensions should be replaced by a Treasury contribution of 50p per £1 saved The CPS report claims Johnson’s radical proposals are in keeping with the spirit of last month’s Budget, at which Chancellor George Osborne announced a package of measures that give retirees unprecedented access to their savings.

The Nine Proposals that May Change the UK Pensions Landscape

Here is a summary of some of the proposals

Pension contributions from employers should be treated as part of employees’ gross income, and taxed as such.
Tax relief on pension contributions should be replaced by a Treasury contribution of 50p per £1 saved, up to an annual allowance, paid irrespective of the saver’s taxpaying status.
Tax relief would be the same for everyone with a flat rate of income tax relief of 25% or 30%
ISA and pension products should share an annual combined contribution limit of £30,000, available for saving within ISA or pension products (or any combination thereof). This would replace the current ISA and pensions tax-advantaged allowances.
The 25% tax-free lump sum should be scrapped with a 5% “top-up” of the pension pot, paid prior to annuitisation
The Lifetime Allowance should be scrapped. It adds considerably complexity to the pensions landscape, and with a £30,000 combined contributions limit for pensions and ISAs, it would become less relevant over time.
The 10p tax rebate on pension assets’ dividend income should be reinstated.
People should be able to bequeath unused pension pot assets to third parties free of Inheritance Tax (perhaps limited to £100,000), provided that the assets remained within a pensions’ framework.
The rate of tax relief on contributions to children’s pensions should be increased to 30%, irrespective of the donor’s marginal rate of income tax.
The annual allowance should be set at £8,000, with prior years’ unutilised allowances being permitted to be rolled up, perhaps over as much as ten years, all subject to modelling confirmation.

You can read more about the UK budget at

http://www.qropsspecialists.com/end-final-salary-scheme-transfers-qrops/