For immediate release: Friday 11th April 2003

IMA WELCOMES PENSION TAX SIMPLIFICATION

• Substantial reduction in compliance costs

• Significant increase in competition

• Attractive new products for consumers

The IMA today submitted its response to the Inland Revenue’s consultation document on pensions tax simplification.

It warmly welcomed the proposals in the paper, which will open the door to a new generation of simple, transparent and flexible pension products.  The key proposals are:

• The abolition of the current age-related limits on annual contributions, which impose significant administrative complications, adding to costs and acting as a major barrier to the entry of new pension providers
• Basing the approval of schemes on the present regime for ISAs rather than the present very complicated regime which effectively assumes that pensions must be life assurance products

The combination of these two ideas means that a new type of pension product can be developed, with the simplicity of ISAs, allowing people to see exactly how their pensions are invested and are performing, and giving them control over investment strategy before and after retirement.

In its response, the IMA calls on the Inland Revenue to retain the simplicity of the proposals in the consultation document as they are developed into draft legislation.  It is vital to avoid unnecessary complication as the proposals are implemented which could undermine the radical nature of the proposed reforms.

Richard Saunders, Chief Executive of the IMA, said:

“The Inland Revenue proposals are a real milestone, and need to be seen through to implementation.  They will allow the industry to develop a whole new type of simple, transparent and flexible pension product – one fit for the 21^st century.  The fund management industry will be among those looking to take advantage of these exciting reforms.”

A copy of IMA’s response is attached.

For further information, please contact:

Richard Saunders, Chief Executive, IMA, 020 7831 0898

Helen Stephenson, Communications Officer, IMA,  020 7831 0898

65 Kingsway London WC2B 6TD 

Tel: +44 (0) 20 7831 0898 Fax:+44 (0) 20 7831 9975 

www.investmentuk.org 

Investment Management Association is a company limited by guarantee registered in England and Wales Registered number 4343737.  Registered office as above.