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Reform of employer contributions into life assurance and overseas pension schemes 5 November 2018
Draft legislation has been published which will bring into effect the change to widen the definition of beneficiary for qualifying relevant overseas pension schemes.
This measure concerns premiums paid by employers into life assurance products and contributions to qualifying recognised overseas pension schemes (QROPS).
As previously announced these contributions are currently only tax exempted if the named beneficiary is the employee or a member of the employee’s family or household.
This clause introduces amendments to Chapter 9 of Part 4 of the Income Tax (Earning and Pensions) Act 2003 (ITEPA) and will allow the beneficiary to be any individual or registered charity without the premiums being treated as a taxable benefit in kind. This will allow the employee to nominate their preferred recipient irrespective of their relationship to the employee in law. This ensures that employees throughout the workforce are treated fairly and proportionately with employees in marriages or with close family.
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Delivering collective defined contribution pension schemes 13 November 2018
The government has published a consultation which sets out its proposals as to how a particular form of collective defined contribution (CDC) scheme might work in the UK, and the legislative and regulatory regime that would be needed to support any such scheme.
CDC pension schemes allow contributions to be pooled and invested to give members a target benefit level. Advantages of CDC schemes include that they:
• provide a savings and income in retirement option within one package that is potentially attractive to people who are uncomfortable making complex financial decisions at the point of retirement • enable the sharing of longevity risk between members, therefore providing each individual member with an element of longevity protection without the cost of accessing the insurance market • allow employers to offer their employees a pension scheme, which offers an income in retirement in the form of a pension from the scheme’s own assets, but without the risks and balance sheet impact of sponsoring a defined benefit plan
The government recognises there is growing interest in CDC schemes, and the Work and Pensions Select Committee recently recommended that the government should act quickly to legislate to allow the schemes.
The consultation will run until 16 January 2019.
Geographical extent - This consultation applies to England, Wales and Scotland. It is envisaged that Northern Ireland will make corresponding legislation.
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The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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