Under rules introduced by Stakeholder Pensions legislation back in April 2001, members of company pension schemes who are not Company Directors or who do not earn over £30,000 a year can also pay in a Stakeholder Pension (see the Stakeholder Cafe.com). This is known as the "concurrency" rule.
For those who are in company pensions this presented excellent opportunities for people to make additional provision elsewhere as well as having the other routes of Additional Voluntary Contributions. However, with many Final Salary Related Pension schemes now closing for future acccrual of benefits, the Inland Revenue has ruled that the concurrency rules for £30,000+ earners / Co..Directors still applies beacuse the existing benefits accrued (even though you cannot get anymore) are still growing as the member's salary grows.
Our view
What a joke! This is absolutely crazy.
We accept there are rules in place but the Welfare Reform and Pensions Act, which introduced Stakeholder rules, is an 'enabling' act which means that the Inland Revenue can change the rules without having to go back to Parliament. We can only imagine that they will explore the rules with a view to amendment. If they stand by the ruling above then they clearly have no idea about how to encourage more people to save.
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