LONDON, UK — Hewitt Associates, a global human resources consulting and outsourcing company, has welcomed the Government's proposed framework for changes to pension tax relief in the UK in its formal response to the recent consultation.

Tony Baily, pension consultant at Hewitt Associates, said:

"With a record budget deficit, we fully understand the rationale for changes to the pension taxation system. While any increased taxation is always unpopular we believe these proposals are broadly feasible and welcome the Government's proactive consultation with the pension industry.

"We are glad to see the Government has listened to the pension industry's concerns about the complexity of the previous proposals and the potentially debilitating effect on those high earners who often shape pension policy in companies. We believe that a simple approach is desirable and this has driven our response."

Hewitt based its response on its own detailed analysis and modelling combined with a survey giving the views of 160 of the UK's largest pension schemes. The Hewitt survey, conducted in August, established that those running UK pension schemes:

• Intend to offer cash benefits, rather than pension contributions, above the annual allowance (61%). This is particularly popular among DC schemes (80%), while 60% of small schemes are more inclined to do nothing and let the members pay the tax.
• Want the Government to help individuals avoid one-off tax 'spikes' by providing smoothing through the tax system (46% of respondents). This could involve some form of spreading or averaging of the Annual Allowance over a period such as three years

Tony Baily said:

"Two themes dominate the findings—the desire for a reduced Annual Allowance to stay at the highest level possible, and a minimising of the administrative burden. To an extent these themes overlap – with a higher value for the reduced Annual Allowance, fewer individuals will be affected and the administrative burden should be correspondingly lower. Alternatively, these themes can conflict—a lower reduced Annual Allowance would allow a simpler approach.

"We believe that the need for simplicity is paramount, even if this means that a moderately lower reduced Annual Allowance is needed—and this has driven our response."

About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organisations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 30 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visitwww.hewitt.com.