With-profits policyholders could see reductions in payouts for years ahead because of government moves to implement a new 30% tax rate on surplus assets of with-profits funds, Norwich Union says.
Provisions of the recent Pre-Budget mean providers such as NU, which have managed to maintain surplus assets despite the bear market in equities between 2001-3, will now be penalised, says the company’s chief actuary Mike Urmston. “We got 72 hours to respond with no consultation. Not surprisingly, we’re a bit irritated about that.” Currently, the tax rate averages 10% on such surpluses – the average of a 0% rate on pensions and a 20% rate on life, based on the assumption total surpluses represent pensions and life equally, Urmston says. By hiking the rate to 30% overall, providers wi...
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