16 April 2007
– Pension savers able to calculate financial cost resulting from abolition of tax credits in 1997-
– 19 million British adults unaware of impact of abolition of ACT on their pensions –
In response to growing concerns regarding the impact of the decision to abolish Advanced Corporation Tax credits for pension funds, savings and charities in 1997, Brewin Dolphin Securities has launched the UK’s first Pension Tax Calculator. 1
Now available to all, the Pension Tax Calculator http://www.brewindolphin.co.uk/PensionTaxCalculator/ compares the anticipated value of an individual’s pension on retirement to what it would have been had the Government not changed the tax treatment of pension funds in 1997. The calculator also estimates the required increase in the level of contributions from today and the number of additional months to be worked in order to make up for the shortfall.
According to examples from Brewin Dolphin’s Pension Tax Calculator, a 40 year old man who is married with two children could end up having to work for an additional 22 months to make up his pensions deficit or increase his total contributions by 25% from now on. Furthermore, a single mother in her late forties would have to work an additional 15 months or increase her net monthly contributions by 27% in order to make up the difference.
Following the development of Brewin Dolphin’s Financial Services Division, which now has qualified Pension Advisers in most of its 36 offices nationwide, it became clear that many investors in pension schemes were completely unaware of the consequences of the removal of dividend tax credits on their pension funds. Brewin Dolphin developed this calculator to advise their clients how they should increase their contributions to reduce the impact of the tax change. The success of the model encouraged Brewin Dolphin to make it publicly available.
Brewin Dolphin conducted some public research (TNS) in February of this year which showed that 41% (19 million) of British adults had been unaware of the impact of this move on their pensions for the last ten years. The findings also showed that although 19% of Britons were aware that the Chancellor had removed the tax credit, they had no idea of the impact on their pension fund. This means that 60% of British people have made no revisions in their pension arrangements in the ten years since ACT credits were abolished. Hence Brewin Dolphin’s decision to release its Pension Tax Calculator to the general public.
Charlotte Black, Director of Corporate Affairs at Brewin Dolphin Securities, commented:
“Our Pension Tax Calculator clearly demonstrates that it was quite wrong for the Treasury to claim that the abolition of tax credits on pensions would have no impact on their savings2. If it had been acknowledged at the time, investors would only have had to make a very small adjustment to their contributions to make up the shortfall. But ten years on the necessary increase is significant, which also clearly demonstrates the fact that the earlier you invest in pensions the better. We hope that our Calculator will encourage people to take action.”
– Ends –
1 Source: Brewin Dolphin Pension Tax Calculator. The Pension Tax Calculator model makes a number of assumptions in order to calculate the impact of the tax changes on the value of your pension fund. The calculator does not (and cannot) represent the performance of your actual pension.
2 “Pensioners, in my view, will not lose out over this in the way people are suggesting.” Gordon Brown, BBC News July 3, 1997
For further information please call
Charlotte Black – 0845 213 3331 / 07860 247 333
or
Patrick Evans – 07774 133 934
Alistair Kellie – 0780 12345 98
George Ullstein – 07799 622 579
Notes to Editors:
Brewin Dolphin Securities Limited (“BDS”) is the principal operating company of Brewin Dolphin Holdings PLC which is listed on the London Stock Exchange. BDS is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange.
BDS is the largest independent private client portfolio manager in the UK. The Group manages £19 billion of funds on behalf of more than 100,000 clients, and of this £8.8 billion is on a discretionary basis. BDS has 36 offices and is corporate adviser to 133 small and medium sized quoted companies.
The Group provides complete investment management for private investors, charities and pension funds and trades as:
Brewin Dolphin in England, Wales and the Channel Islands
Bell Lawrie in Scotland and Northern Ireland
Hill Osborne in the East Midlands
Wise Speke in the North of England
Stocktrade is the BDS Execution-Only division. www.stocktrade.co.uk
Please see Media Centre section on www.brewin.co.uk for details and photos of all commentators and analysts throughout the BDS Group.