Budget 2012: Final Salary Pension Schemes Pay the Price for State Pension Improvements
Commenting on the UK 2012 Budget, Mike Smedley, pensions partner at KPMG said:
“While today’s Budget was relatively quiet from a pensions point of view, there was nevertheless confirmation of more bad news for open final salary pension schemes.
“The Chancellor confirmed the move to a single tier State pension (some time after 2015) – but didn’t mention that this would also mean the end of contracting-out.
“Without any other changes, the increased National Insurance contributions will see companies’ pension costs go up, and scheme members out of pocket while they are working.
“Most of the changes announced today, such as the move to a single tier state pension and changes to the State pension age, have been well-trailed.
“The rumour mill proved wrong though on changes to rates of tax relief on pension contributions. No changes have been announced, which will be good news for many, and provides some much-needed stability in our pensions tax system.”