Pension news
Pension news
Pensioners in debt ACCORDING TO Prudential’s Class of 2018 research study, nearly one in five of those expecting to retire this year still have debts to clear and owe an average of £33,900. People expecting to retire in 2018 have debts nearly 40% higher than those retiring last year. However, there is some good news as the proportion of people retiring in debt has fallen to 19% from 25% in 2017. The research also found that there are wide regional variations underlying the average national retiree debt figure, with people retiring in the north west (24%) the most likely to owe money, while those in Wales (14%) are the least likely. Vince Smith-Hughes, a retirement income expert at Prudential, said: “At a time when the base rate is expected to rise, it is worrying to see the rapid increase of a pensioner’s average debt. Interestingly, there is a smaller number of people retiring in debt, but for those pensioners retiring in debt, the amount owed is on the rise.” contributions rise in April and that current and future generations continue to strive towards a better income in retirement.” One million employers AE compliant THE PENSIONS Regulator (TPR) published statistics in February in its Declaration of compliance report (http://bit. ly/1Ojgpr2) covering the period July 2012 to January 2018, which reveals that: ● 1,032,567 employers have confirmed they have met their duties by completing a declaration of compliance ● 9,285,000 eligible jobholders have been automatically enrolled into an automatic enrolment (AE) pension scheme ● 38,662 employers have confirmed they have met their duties by completing a re-declaration of compliance ● 549,000 eligible jobholders have been automatically re-enrolled into an AE pension scheme. Darren Ryder, TPR’s director of automatic enrolment, said: “The continued support of the pensions industry, including pension and payroll providers and business advisers has been crucial to the success of automatic enrolment. The industry has helped us ensure employers have the tools, information and services they need to comply with the law.” Nigel Peaple, deputy director defined contribution, lifetime savings and research at the Pensions and Lifetime Savings Association, commented: “Whilst it’s important to recognise the hard work that has been put into automatic enrolment, it’s vital we don’t become complacent. There remains an important communications challenge for government, the industry and employers to ensure that people do not opt-out of their scheme when their pension
Pension tax relief and Scottish income tax HM REVENUE & Customs (HMRC) has published guidance – Pension scheme relief at source for Scottish income tax newsletter (http://bit.ly/2BItKw1) – in light of the divergence in rates and bands between those for Scottish tax payers and those for taxpayers in the rest of the UK (rUK). The guidance explains what this means for Scottish tax payers who receive tax relief on their pension savings. Where employee contributions to a registered pension scheme are made under the net pay arrangement, the individual will automatically get the right amount of tax relief on their pension savings irrespective of the band or rate of tax or whether they live in Scotland or elsewhere in the UK. For tax year 2018–19, scheme administrators of schemes operating relief at source (RAS) will continue to claim from HMRC tax relief at 20% (the UK basic rate) for both Scottish and rUK taxpayers. Because members in RAS schemes are entitled to have their gross pension contributions reduced by this rate it will continue to be used even if the employee is a Scottish starter rate taxpayer ● starter rate (19%) will not be asked by HMRC to repay the difference of tax relief between that and the 20% rUK rate ● intermediate rate (21%) will be able to claim the additional 1% of tax relief on their pension contributions either through their self- assessment return or by contacting HMRC if they do not already complete such returns. HMRC will adjust the tax code for these individuals so that they receive tax relief through their pay ● higher rate (41%) or top rate (46%) will continue to claim the additional tax relief between 20% and their marginal income tax rate either through their self-assessment return or by contacting HMRC. (Note this applies whether or not the taxpayer lives in Scotland or elsewhere in the UK.) Beyond 2018–19, HMRC will continue to explore with payroll providers the most appropriate way to cater for the new income rates and bands announced by the Scottish government as well as changes by the devolved administrations. (19%) or Scottish intermediate rate taxpayer (21%). Those living in Scotland and paying the Scottish:
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Issue 39 | April 2018
| Professional in Payroll, Pensions and Reward |
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