mast image

Special Report

Impact investing

Sections

UK tax changes could 'damage' pension contribution levels

Related Categories

Changes proposed to the UK tax system risk lowering pension contribution levels and damaging state finances, the government has been warned.

Research by the National Institute of Economic and Social Research (NISER) cautioned the government against shifting to a taxed-exempt-exempt (TEE) arrangement, claiming that the short-term increase in tax receipts would come at the expense of future income.

Commissioned by the Association of British Insurers (ABI), the think tank argued that the current exempt-exempt-taxed (EET) model had “superior” risk sharing properties.

It also questioned whether future governments could be deterred from taxing pensioner income even if the current government shifted to TEE.

<

Yvonne Brown, the ABI’s director of long-term saving, said the proposed model risked creating a “fiscal time bomb” for future generations.

“Many savers would be worse off, and it would also damage the economy more widely because of its impact on saving and investment,” she said. 

Work commissioned by the ABI estimated that a shift to TEE would lower individual savings by one-sixth, and could reduce GDP output.

“It’s superficially attractive because of the savings it can deliver in the short term,” Brown added, emphasising that it was no more than a temporary windfall.

The changes were first proposed following the 2015 Summer Budget, but were criticised over the risk they would fail to address the current savings shortfall in the UK.

Chancellor of the Exchequer George Osborne is expected to announce his decision on tax changes in mid-March during the 2016 Budget.  

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2548

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 300-400m.
    Closing date: 2019-07-30.

  • QN-2549

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 300-700m.
    Closing date: 2019-07-30.

  • QN-2550

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2551

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2552

    Asset class: Fixed Income, High Yield (Active).
    Asset region: High Yield (US).
    Size: CHF 500-600m.
    Closing date: 2019-07-29.

  • QN-2553

    Asset class: Fixed Income, High Yield (Passive or Passive Enhanced).
    Asset region: High Yield (US).
    Size: CHF 500-1'100m.
    Closing date: 2019-07-29.

  • QN-2554

    Asset class: Global Real Estate (Equity, unlisted Funds).
    Asset region: World (ex-Switzerland).
    Size: CHF 200 mn (potential for further growth).
    Closing date: 2019-08-07.

  • QN-2555

    Asset class: Real Estate.
    Asset region: European.
    Size: EUR 50 - 100 million.
    Closing date: 2019-07-22.

  • QN-2556

    Asset class: FX Hedging.
    Asset region: Global.
    Size: Mandate size of CHF 1.5 bn.
    Closing date: 2019-08-09.

  • QN-2557

    Asset class: All/large Cap Equities.
    Asset region: China A-shares.
    Size: Unit linked platform (0m USD in initial investment).
    Closing date: 2019-08-01.

Begin Your Search Here
<