Tax efficient pension provision - 2012+

Since 6 April 2011, saving through registered pension plans has been restricted by an annual allowance of £50,000 (plus unused allowance from the previous three tax years). From 6 April 2012 the limit on lifetime saving through registered pension plans (the lifetime allowance) will reduce to £1.5m (from £1.8m). Employers need to consider how they will assist employees who are at or near these limits. Some employers are looking to cap pension savings in registered pension plans to avoid breaching the new allowances. The question remains: what alternative pension provision will be offered to mitigate the employees' losses? Unregistered pension plans Employers can offer their employees additional or alternative pension provision through an unregistered pension plan. These arrangements (now known as Employer Financed Retirement Benefit Schemes or EFRBS) are subject to new disguised remuneration rules, but remain viable in some forms. Whilst the tax advantages of funded EFRBS have been withdrawn and the use of secured EFRBS curtailed, unfunded unsecured EFRBS still remain a good option. An unfunded unsecured EFRBS deserves careful consideration when reviewing the options for employees who wish to accumulate high levels of pension savings. We've looked at this in detail on the website at: Tax efficient pension provision for high earners in 2012 and beyond