Tax Efficient Pension Provision Post ‘A-Day’

Companies wishing to enable their employees to optimise the tax reliefs afforded to savings for retirement should now consider adopting an HMRC-approved employees' Share Incentive Plan (SIP) as part of their ‘post A-Day’ planning for pension provision.Why? Because the tax reliefs afforded to participants in a SIP (and their employer companies), when coupled with the tax relief afforded to post A-Day contributions to a Registered Pension Plan (RPP), afford the potential to enhance significantly the value of an employee's pension fund. Until now, transfers of shares from a SIP could be made only to a stakeholder pension or an ISA. From A-Day, such transfers can be made into any form of RPP.

Of course, monies contributed to a SIP can be invested only in ‘own-company’ shares. However, the fact that contributions may be made out of gross salary, coupled with tax-free growth in value in both the SIP and, subsequently, the RPP, and tax relief for contributions to an RPP, mean that if, after