10 May 2007
The Pension Protection Fund wants the Treasury to re-examine tax
rules it believes deter companies from making large lump-sum
payments to their occupational pension schemes, according the
Guardian.
The Guardian reports that officials at the Pension Protection
Fund (PPF) are concerned that companies are failing to clear
pension fund deficits quickly because they lose corporation tax
relief on large contributions to their schemes. Current tax rules
deny employers tax relief when contributions have increased by more
than 210% on the previous year. This tax charge has persuaded many
companies that they should clear their deficits over 10 years or
longer at a time when the PPF wants deficits cut as soon as
possible.
According to the Guardian, the PPF is planning to write to the
Treasury asking for a review of the rules to see if the strict
guidelines on tax payments can be eased.
A Treasury spokesman said the 210% rules spread tax relief on
employer contributions and provided "a brake on tax relief for
unusually large contributions". He said this measure allowed
companies to steadily build up surpluses in their funds, but
"prevented pension fund surpluses being used as a means of
disguising profits".
