A survey has found that employees are asking more questions, driven by concerns over breaching pension tax allowances
A new report has shown that tax has become the biggest pensions issue for HR departments.
Two out of three (67 per cent) of HR departments have dealt with pension tax inquiries, while 60 per cent have handled questions about the value of pension funds.
The report – produced by employee benefits consultancy Portus – was created from a poll of over 100 HR professionals. It suggests that new rules are making retirement planning an increasingly complicated issue for employees.
In April, for example, the lifetime pension allowance was cut from £1.25million to £1million. At the same time, annual contribution allowances set at £40,000, will be tapered for employees currently earning over £150,000 and reduced to £10,000 once they earn over £210,000.
Approaching half (45 per cent) of HR departments said they have dealt with concerns from higher-earning staff worried about breaching pension tax allowances.
Meanwhile, HMRC figures show the number of taxpayers who are exceeding the annual allowance is rising.
Some 1,539 people paid a pension tax charge in the 2015/16 tax year for breaching the £1.25 million allowance, generating a total of £126million, compared to 1,482 people the previous year generating £78million.
Elsewhere, only one in five HR departments say they have received queries about pension performance issues while 14 per cent have handled enquiries about state pension entitlements.
Portus Consulting commercial director Steve Watson said: “Tax issues are highly complex and employees may not know what their annual allowance or lifetime allowance is until the end of the tax year.
“HR departments face a wide range of issues and keeping on top of pension tax rules is yet another challenge which can lead to problems if called upon to provide detailed advice.
“Retirement planning, however, is clearly becoming a major part of the job for HR departments, highlighting the need for solutions which can address employee concerns.”
Scottish Widows retirement expert Lynn Graves said employers should look to their pension provider for support:
“Pension providers and advisers will often be able to provide content to help educate employees. For example, we offer employers a short video that explains the changes to the annual allowance.
“This sort of engagement helps employers get on the front foot, supporting employees before they ask and also reaching those who might not know enough to raise the question.”