“The Government response raises more questions than it answers. Although this development is good news for some – mainly high earning – members, it’s bad news for pension schemes.
“It will be mandatory for schemes to offer the ‘scheme pays’ option where members are subject to an annual allowance tax charge of only £2,000, yet the Government has not indicated how schemes should operate this facility and they will not be able to charge for providing this option. This seems unfair, as the additional cost and administrative burden on schemes is likely to be significant, particularly for defined benefit schemes where adjusting benefits to reflect the amount of tax paid from the scheme will be complicated. The cost to the scheme of doing so (including the cost of actuarial advice) could potentially be greater than the tax charge itself. This appears unreasonable.”
