Occupational Pensions: Tax Allowances

HM Treasury written question – answered on 3rd April 2017.

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Photo of Baroness Altmann Baroness Altmann Conservative

To ask Her Majesty’s Government what plans they have to ensure that employers and workers are told that net pay arrangement pension schemes may be unsuitable for workers who earn below the personal tax threshold, and that they face paying more than 20 per cent extra for their pension than if they were in a relief at source scheme.

Photo of Baroness Altmann Baroness Altmann Conservative

To ask Her Majesty’s Government what plans they have to ensure that employers and workers are informed that net pay arrangement pension schemes may be unsuitable for workers who earn below the personal tax threshold unless the employer or the scheme pays in the amount they would receive in tax relief on their behalf.

Photo of Baroness Altmann Baroness Altmann Conservative

To ask Her Majesty’s Government what contact they have had with the Pensions Regulator during the past six months to ensure that the Regulator and the MasterTrust Assurance Framework take all necessary steps to ensure that workers earning below the personal tax threshold, and their employers, who are paying into net pay pension schemes under the auto-enrolment rules, are not disadvantaged by the loss of tax relief, and are properly informed of the personal impact of those schemes.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Commercial Secretary to the Treasury

The Government has regular discussions with the Pensions Regulator on a range of issues, including workplace pensions.

Workplace pension schemes are chosen by employers and the Pensions Regulator (TPR) provides guidance on this in relation to automatic enrolment. The guidance covers the choice between net pay and relief at source schemes, and the implications of net pay schemes for employees who do not pay tax. It also points out that some schemes that use the net pay arrangement may have lower charges than schemes that operate relief at source.

All employers, including public sector employers, are expected to follow TPR’s guidance about providing their employees with relevant information on the arrangements for tax relief.

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