Pensions Schemes after the 1989 Budget

<p>The Social Security Act 1986 allowed a wider range of pension schemes to contract out of the state earnings-related pension scheme (SERPS). Individuals now have a good idea of choice concerning their pension strategy, and an evaluation of this strategy involves some complex decision-making by individuals. One component of this choice is the tax treatment of pensions. Pensions are given a degree of 'fiscal privilege' relative to other forms of investment, such as life insurance. The issue of pension taxation, and reforms to the system of taxation, have been discussed by Fry, Hammond and Kay (1985), but this particular study preceded the major reforms introduced in the 1986 Act.</p>