Aon Hewitt says changes to the annual allowance widen the burden from additional tax rate payers to higher rate payers
LONDON – Aon Hewitt, the global human resources solutions business of Aon plc (NYSE:AON), has commented on the announcement of changes to the annual allowance in today’s Autumn Statement.
Liam Mayne, senior consultant at Aon Hewitt said:
"We fully understand the need to boost the national coffers but we would have much preferred it if the pension tax system had been left well alone. The current system was only put in place two years ago and has barely bedded in. This change simply undermines its stability at a time when the industry is doing its best to boost saving for retirement.
"With the reduction to £40,000 we see some significant implications for both individuals and organisations. With this change it’s not just additional rate taxpayers that are targeted but higher rate taxpayers too. Our calculations show that long serving defined benefit (DB) members earning over £100,000 in a typical DB scheme (60ths) will now struggle to avoid an extra tax charge each year.
“That will be particularly unwelcome for these individuals because they already lose part or all of their personal allowance - facing a marginal rate of tax of 60% in the process, as well the prospect of losing child benefit from next year - to the tune of nearly £1,800 a year for a typical family of two children.”
Liam Mayne continued:
“Although the Chancellor has announced the changes will be in place from 2014/15, because of pension input periods the changes could apply to individuals from as early as April 2013.”
Notes to Editors
About Aon Hewitt
Aon Hewitt is the global leader in human resource solutions. The company partners with organisations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit www.aonhewitt.com.
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Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsorship with Manchester United
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