CBI Calls For Clarification Of UK Pensions Tax Rumours

by Jason Gorringe, Tax-News.com, London

27 September 2002

Following a Times report earlier this month, in which it was alleged that the UK Treasury is considering abolishing or taxing the right to claim a lump sum of pension contributions at retirement, Confederation of British Industry (CBI) chief, Digby Jones has urged the government to issue clarification on the matter.

Speaking last night at the CBI East of England annual dinner, Mr Jones warned that the move - which could garner the government as much as £14 billion in the medium to long-term - 'could be seen as punishing people who have bothered to make plans.'

He continued: 'The government is right that we need action on pensions. But it should be offering incentives to people to take out private provision, not undermining the current system. It has already caused enough problems with the removal of the dividend tax credit.'

'Removing the tax-free lump sum would make matters worse. It would reduce the attractiveness of pensions schemes and the incentives for individuals to save. I strongly urge the Chancellor to quash these rumours so that they do not cause unnecessary worry,' the CBI head concluded.

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