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Sunday 18th May 2008
Even though we are seeing more and more final salary company pension schemes sold off to third parties in order to reduce company liabilities and exposure, it seems that the short fall which many are having to make-up before selling their schemes may cost the Treasury dearly. Leaders of the pensions industry have flagged the problem which seems to be getting worse.
In essence the problem revolves around the fact that more and more companies are being forced to inject additional funds into their pension schemes to make up projected shortfalls for members. The funds which are being transferred to the pension schemes do not attract corporation tax and therefore there has been a sharp reduction in the income received by the Treasury.
Danny Truell of the Wellcome Trust estimates that overall, companies were forced to inject additional funding of £30 billion into their pension schemes last year, which has cost the Treasury £10 billion in tax income. There are also concerns that this underfunding position will get worse before it gets better and reduce the government’s tax intake yet further.
It seems that the authorities are under pressure from all sides with very little room for manoeuvre. |
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