Good news from Europe on tax-free cash
Well, that’s cheered me up. Those of you who read my recent BeeLine entitled “Tax-Free Lump Sums - More problems on the horizon?” will know that we have been on tenterhooks for the last week or so waiting to see if a recently agreed amendment to the Occupational Pensions Directive (OPD) would be overturned by the lobbying of the UK pension fund industry.
The OPD is a piece of European legislation that is aimed at eventually putting a framework for pan-European pension schemes in place. The amendment that got everybody over here in the UK so worked up, though, could have put an end to tax-free cash sums from our pension schemes. Not helpful, to say the least. If you want to read chapter and verse on that, feel free to download my other BeeLine mentioned earlier (click on the link below). The good news is, though, the amendment has been knocked on the head, so to speak, and we’ve got nothing more to worry about on the tax-free cash front.
This is obviously a very good result for the UK pensions industry, but does underline the fact that we will need to keep a very close watch on European pension developments to make sure no other nasty surprises pop up in future.
What the European Parliament is trying to do is obviously very difficult. Clearly, large multi-national companies are keen on the idea of a pan-European pension framework, but getting a common thread through the vastly different and complex pensions structures in the fifteen member states is more than a bit fiddly. I predict we’ll see years of complex legislation and amendments, and amendments to those amendments, before we get anywhere near a European pension system, so don’t be surprised if I return to the European theme from time to time in other BeeLines.
In the meantime though, we can stop worrying about tax-free cash again and get on with worrying about the Green Paper and the Inland Revenue Review. Hey Ho!
11 March 2003
This is based on Scottish Life’s understanding of the current and proposed tax laws. These may change in the future.