Organisations have to be pro-active in light of the cuts to tax relief affecting the pension pots of higher earners to remain competitive.
This was the message that Jeremy Mindell at Henderson Global Investors construed to delegates attending his presentation at the Employee Benefits Pensions Summit held at Pennyhill Park in Surrey this week.
He said that pensions with little tax relief were not attractive and company board directors were likely to become disinterested in the workplace pension scheme because it does not benefit them.
“It’s clearly a challenge if the government goes down the route of compulsion instead of encouraging people to save for their future”, he said.
He added: “Most employees do not earn more than £150,000 therefore pensions are still very important to them but top earners will be detached from the scheme.”
Mindell urged employers to maximise the tax savings inherent in share schemes and consider setting up arrangements where by deferred shares can be put into a self-invested personal pension (Sipp).
Although he warned that the Association of British Insurers were likely to be sensitive about the excessive use of tax efficient measures, especially salary sacrifice arrangements and joint ownership plans.
Efurbs, said Mindell, were likely to become popular alternative to a pension for higher earners. “The savings grow tax free off shore to make a lump sum on which tax is paid at the end”, he said.
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