NAPF deems taxation method ‘fundamentally flawed’

The National Association of Pension Funds (NAPF) has submitted five key pledges to the Treasury ahead of the Budget announcement on June 22.

In a bid to turn the government’s rhetoric on improving workplace pensions into action, NAPF chief executive Joanne Segars has reiterated calls to lower the annual allowance to £50,000, and for the Treasury to issue more long-dated and index-linked gilts.

“The [pensions taxation] methodology written in the Financial Services Act 2009 is fundamentally flawed,” said Segars. “It sends a negative message on pension saving, and affects far more than the 260,000 workers cited by the government.

“By reducing the annual allowance to £50,000, the Treasury could yield £3.5bn, and it could be implemented as soon as 2011.”

The NAPF is also proposing seven principles for public sector reform. It calls on the forthcoming pensions commission to ensure the benefits are fit for purpose, adequate, affordable, share responsibility and risk between employer and employee, demonstrate high levels of quality and efficiency, and introduce greater flexibility to improve the mobility of provisions for workers from public to private sector.

Segars also put pressure on the Treasury not to give in to pressures from forthcoming European pension regulation.

“Active intervention will help sustain UK pensions for the future,” she said.