An imagined conversation featuring:

Tess (HR Director) and Joe (Sales Director)

Tess: Hi, Joe, looking forward to this week’s strategy meeting. You all set with the numbers from last month’s campaign?

I’ve got a sneaking suspicion he may not have done it yet.

Joe: Hi, Tess. I’ll try to get the data to you in time, but I’m not sure that I’ll be able to make the meeting – I’ve got something else in my calendar that day that I can’t get out of.

S#*%, forgot all about the meeting!

Tess: Really? This has been arranged for weeks. What could be more important?

Grrrgh, I flippin’ knew it, he better have a good excuse.

Joe: Well, it’s personal stuff, really, but I have to see my accountant about some tax I might have to pay, apparently. I wouldn’t usually do this in work time, but it’s something to do with the company pension scheme, or so our benefit consultant tells me.

This pension lifetime allowance stuff has really got on top of me, so at least I can use it as an excuse.

Tess: This is difficult, Joe – we need you there and, to be honest, this sounds like it’s your problem, not the company’s. And why aren’t the numbers ready yet? You knew I wanted them by last Friday – what’s holding you up?

You’re not wriggling out of this one Joe and really? Trying to blame it on the company pension is pretty lame.

Joe: Yes, I know and I’m sorry; I’ve been a bit distracted with this tax issue. If what I’m hearing is right, it’s a lot of money to find that I haven’t budgeted for. In fact, I was hoping we could find time for a chat about my bonus – I might need to ask you for extra this year!

Busted, better lay it on thick – here it goes.

Tess: Your timing’s not good, Joe. Things are a bit up in the air at the moment. Apart from the numbers not looking so rosy, we’re still wondering how to deal with the likely impact of all these political changes on our overseas business. I know someone once said “may you live in interesting times”, but I could do with a couple of years without any more upheaval!

He’s gotta be joking, time to manage expectations here I think.

Joe: Yes, I know, but that’s also why I need to talk to you. With things looking a bit uncertain, I was thinking of that role at Megabucks PLC. I wouldn’t usually worry too much about the money, but at the moment, what with the extra tax, the school fees and the new basement...

Ok, in for a penny in for pound, lets turn the screw a little here and see what happens.

Tess: Ok. Let me think about it. You probably know that Alan has just handed in his notice. Without giving too much detail, he was facing something similar to you.

Hmm, is he for real now or just playing me?

Joe: Yes, I’d heard that. Alan mentioned something about “carrying forward” and paying a personal contribution to bring down his tax bill, but I wasn’t really listening. It sounds like the company might have a problem here – do you know anything about it?

Wow, might be onto something here...

Tess: Not really. I had a meeting with our corporate advisers after the summer Budget last year. I think our consultant mentioned that there were changes in the amounts that we can pay to pensions without affecting people’s tax relief, but to be honest, these limits keep changing and I don’t recall the detail.

But I do remember thinking that it wouldn’t be anything for the company to worry about as we don’t pay more than the limit of £40,000 for anyone. Anyway, as you say, it’s an issue for individuals, not companies, and if people are concerned about it, they can always leave the workplace pension scheme, can’t they?

Bluff, bluff, bluff…

Joe: You might have told me!

Crikey. I do have a problem here, must be someone else’s fault, mustn’t it?

Tess: We did. We put loads of information on the company intranet.

I think/hope?!

Joe: Sorry, Tess, but we’re all too busy working to spend time scouring the intranet. Have you looked at it lately? It’s full of stuff from HR about how to sit safely at your desk!

And anyway, if you’re saying that our only option is to leave the scheme and give up our company pension contributions, well, that doesn’t sound like much of a choice, particularly as I get a 20% contribution, and on my £190,000 salary, that’s a lot of money.

But thinking about it, if I’m within the limit, why have I got a tax bill? I’m far too important to read stuff people send me.

Tess: Hmm…I’m not exactly sure, but I think the limit reduces once your pay gets to a certain level. Anyway, like I say, it’s not really any concern of the company’s; we can’t start paying your tax bill for you.

Errrr, I’m out of my depth here, I really do not like workplace pensions. What’s the name of that I contact I have at our advisers?? And did he say something about the scheme paying the tax if someone’s contributions are over the limit?

Joe: And if I do leave the workplace pension scheme, will you give me extra salary to replace the company contributions that I’d be giving up?

In for a penny...

Tess: Err….no…yes…..maybe. We’d have to look at that closely before I could say. Giving you more money has other consequences, you know, like more National Insurance for the company to pay and probably higher costs on some of the other employee benefits you get.

I wish I’d listened more closely to our adviser; I’m sure he mentioned this, too.

Joe: Yes, well, you might have another problem to worry about now. I’m not sure that I can afford to work here, if you can’t make sure that we know about this sort of stuff and offer some sensible alternatives. See you later, Tess.

In for the kill, no turning back now!

*End of interview*

Posted by Darren Hedgley

Topics: Pension Lifetime Allowance

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