The Under The Radar Pension Tax Scandal

If you are an employer, could this apply to you?

Julia Dreblow
Founder, sriServices & Fund EcoMarket

Ros Altmann* writes in Money Marketing

 

“I want to highlight a major pensions injustice concerning employers who choose an auto-enrolment scheme administered on a net pay basis.

“Such schemes cannot add the 25 per cent bonus of tax relief to contributions of workers earning less than £11,500 a year from the employer.

“Auto-enrolling these employees – mostly women – into a net pay scheme forces them to pay extra for their pension. Every £10 that someone on more than £11,510 a year puts into a pension will cost only £8 but every £10 low earners contribute costs them the full amount. So the lowest paid are paying £2 more for the same pension.

“If their employer were to use a relief at source scheme instead, no one would have to pay more than £8 for their £10 of pension. But most would not understand the difference between choosing a net pay or relief at source scheme.

When discovering this as pensions minister, I tried desperately to address it. But nobody was interested in helping the low earners.Officials said “It’s not much money”, which I found unacceptable.

Firstly, it may not be much money, but it could and should be theirs if their employer had chosen a different scheme.

The PFS Annual Conference

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Good Money Week Campaign

goodmonetwseekpiggybank2014Good Money Week is the campaign to raise awareness of sustainable, responsible and ethical finance to help people make good money choices.

Good Money Week aims to ensure that everyone knows they have sustainable and ethical options when it comes to their financial decisions.

Good Money Week takes place this year from 30th October- 5th November.

During this annual event we make it a focus for the financial editors of national papers to publish real life stories about people who make the choice to invest in Socially Responsible Investments, (SRIs). The important thing is that they are not odd or extreme in their principles but normal people who take the time to consider the potential outcomes of investing.

If you can invest and get the same, or better, return on your investment and be certain that the investment meets your ethical values, then surely that’s a win-win.

There are of course the cynics who question those good intentions.  In the same way that a driver of an electric vehicle is challenged over the source of the electricity they charge the vehicle with.  Most of us ensure it’s from either wind or solar but it does not stop the cynics.  Somehow doing thoughtful things, like using alternative energy or composting garden waste and not burning it is still considered odd!

Someone please explain it to me?

You might want also to explain why some prefer to drive a mile rather than walk.  Walking restores your energy levels and keeps you fit, driving causes pollution, outside the school, in green spaces and around your homes!  It’s a responsible life-style choice.

So therefore, if investing in thoughtful and responsible ways provides good returns and respects your values, what stops you?

Is it a lack of understanding, a question of not knowing where to find responsible investments or preferring to leave money with your bank so they can do irresponsible things with it?

To find out more about Good Money Week – goodmoneyweek.com

Or talk to me?