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11 April 2019

Over 12,000 pension savers have breached lifetime allowance (LTA) protections in the past 12 years, potentially incurring tax bills running into hundreds of thousands of pounds.

Every time the LTA has been cut since its introduction in April 2006, a new set of transitional protection rules have been created.  The four types of protection that can be lost when a member contributes to a pension scheme are enhanced protection and three types of fixed protection introduced in 2012, 2014 and 2016 respectively.

The LTA can effectively punish defined contribution savers who enjoy strong investment performance and successive cuts to the allowance in recent years have created a complex web of protections designed to protect people close to the lifetime limit from being unfairly penalised.

A number of these protections come with terms and conditions – namely that you are no longer allowed to contribute to a pension scheme.  If you do, the protection is lost and you could face a huge tax bill on the excess.

Around 7,000 of the breaches have been recorded since the introduction of auto-enrolment in October 2012, with a particular spike since 2017 coinciding with the roll-out of smaller business reforms.

It is likely a significant proportion of these people accidentally broke the terms of their protection by failing to opt out of their workplace scheme, either initially or at their re-enrolment date three years later.  For these people, the massive resulting tax bill will be a bitter pill to swallow.

This is one of the many reasons why employers use Corinthian Benefits, as we provide education, engagement and advisory services to their employees and help them avoid some of the pitfalls that ongoing legislation creates.

If we can help you and your employees in the same way that we’ve helped hundreds of other companies, please give us a call today.

4 April 2019

Millennials have a “worrying lack” of awareness as to how pensions work, according to a recent survey.

The majority of those aged between 24 and 34 did not know what happens to pension savings, with over half thinking it is deposited in savings accounts and earning a fixed amount of interest.

The majority of these employees are now actively savings into workplace pensions, via auto-enrolment, so there is a clear need for employers to improve communications, understanding and engagement.

With statutory minimum contributions increasing this month, employees will want to understand more about their pension options than ever before and many will want direct and honest language in communications about their pensions, rather than the usual industry jargon.

At Corinthian Benefits we specialise in improving employee engagement and appreciation of the benefits provided by introducing a comprehensive communications exercise including the following:

  • Tailored presentations to different age groups
  • Individual one to one consultations
  • Personal member booklets outlining the benefits provided
  • Online access to personal benefit information

Give us a call today and see how we can help you.