Changing work patterns call for re-examination of pension tax rules – SPB

Changing work and income patterns resulting from the Covid-19 pandemic call for a re-examination of pension tax rules, Squire Patton Boggs (SPB) has said.

The law firm warned that tax rules need to adapt to changing working habits to ensure that pensions remain “both fit for purpose and an attractive vehicle for long-term savings”.

In an overview exploring the long-term impact the Covid-19 crisis could have on pension saving, SPB partner, Kirsty Bartlett, queried whether pension tax legislation could be adapted to better facilitate partial retirements.

Bartlett also noted that there could be benefits in increasing the permitted time period between a member accessing their initial lump sum and their monthly pension coming into payment.

Furthermore, the potential rise in flexible working could “increase pressure on government and employers to provide more flexible pension schemes”, according to Bartlett.

In its overview, SPB also warned that the increased pressures on defined benefit (DB) pension scheme funding arising from the pandemic could put a strain on trustee-employer relationships.

Differing expectations of The Pensions Regulator (TPR) and the sponsoring employer was highlighted as a key issue, especially if the employer is owned by an overseas parent company that is unfamiliar with the regulator framework applicable to UK DB schemes.

Additionally, SPB noted that disagreements “commonly arise” where employers are reluctant supply confidential financial data to trustees.

To avoid a breakdown in relationships, SPB suggested that transparency is balanced with commercial sensitivity by establishing information-sharing protocols, confidentiality undertakings and robust trustee conflicts of interest policies.

“These documents are sometimes only considered when there is already a strained relationship, or when a specific need arises, such as a potential corporate takeover,” stated Bartlett.

“However, there may be merit in agreeing ongoing information-sharing arrangements, to reinforce a culture of openness and trust, so that expectations can be managed and to enable prompt sharing of information in time-critical situations.”

    Share Story:

Recent Stories

Sovereign bonds and climate change considerations
In Pensions Age's latest podcast, Laura Blows is joined by Hilary Norris, Product Manager, Sustainable Investment, EMEA, FTSE Russell, to discuss sovereign bonds and climate change considerations

Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks