Pensions A-Day has little impact on small businesses

A-Day, which was supposed to simplify the way pensions are taxed in the UK, has had a negligible impact on Britain’s businesses according to research released earlier this month by the Tenon Forum.

Six months has passed since A-Day but more than half of the country’s SME owner-managers have made no change to their company’s pension schemes to comply with the legislation.

The changes set out to make it easier for high earners to channel large lump sums into a range of exciting investment opportunities but last minute U-turns put pay to these lofty intentions.

58 per cent of the SMEs surveyed said that they had made no change. Only 20 per cent have protected their pensions from newly introduced taxes on future growth.

The bi-annual research, conducted by GfK NOP on Tenon’s behalf, questioned managing directors, financial directors and senior directors of 500 small and medium-sized businesses for analysis by the Tenon Forum, an independent think-tank of entrepreneurs.

The massive range of businesses involved in the research, from the manufacturing industry to the financial and business services industry, all produced similar results showing how ineffective the communications campaign has been right across British business.

Peter O’Sullivan, Director of Financial Services at Tenon, said:

"When plans for A-Day were announced, we anticipated a massive overhaul of the way pensions are taxed. But understandably, serious concerns were raised about the proposed changes because it looked to many as though the wealthy would be the only ones to benefit."

"In December 2005, the Chancellor announced a large U-turn in policy and watered down the legislation almost beyond recognition. It was suggested that the U-turn was made because the implications of the original announcements had not been thoroughly thought through."

"In any case, for such a large and important scheme, the government must be disappointed that they have made so little headway into sorting out the complicated world of pensions, this could have much to do with the increasing complexity of the new "simplified" legislation."

• We recommend you read our article - Pensions A-Day: 10 key facts you need to know