Dear Mr Darling
At our recent Annual Conference in Edinburgh our members voted overwhelmingly in favour of urging Her Majesty’s Government to abolish Stamp Duty and Stamp Duty Reserve Tax on “chargeable securities.”
We are aware of the longstanding campaign for abolition conducted by many groups. Whilst recognising the validity of the economic arguments posed by many of these groups. Our focus centres on the negative effect that stamp duty has on pension schemes.
The importance of saving through pension schemes for greater self reliance in retirement cannot be over emphasised, yet, stamp duty is a tax which siphons off in excess of £8 000 * from the average pension pot by the time of retirement.
Furthermore, it would appear that the impact of the tax is even greater on stakeholder pension funds than on occupational pension funds. In a recent study.** it has been estimated, based on saving starting at 25 years old and retirement at 65 years old, that stamp duty reduces the value of an occupational pension fund by 1.5% for a balanced allocation fund, rising to 2.38% if it is equity based. The corresponding figures for a stakeholder pension fund are 2.44% and 3.11% respectively. It would appear to be incongruous that “Stamp Duty penalises ordinary people who invest in flagship government schemes such as a stakeholder pension.” ***
The social and economic consequences of low incomes for pensioners are far reaching for all sectors of society. It is well documented that women are disadvantaged in terms of pension provision because of the pattern and nature of their work. Therefore, a tax which lowers pensions will have a greater negative impact on women than on men.
Recently your Department saw fit to abolish the stamp duty on Non-Resident Exchange Traded Funds. We respectfully request that this abolitionist trend is extended to exempt pension schemes from Stamp Duty costs, in the interests of ensuring pensioners in the future enjoy decent living standards.
We would welcome your comments.
On behalf of Business and Professional Women UK
Sue Ashmore (Action director)
References:
* Sunday Telegraph interview with Conservative Party August 2006: Glasgow Herald article 2002
** Stamp Duty : Its impact and benefit of abolition, May 2007, Published by Oxera, Commissioned by the London Stock Exchange et al
*** Comment on above study by Richards Saunders, Chief Executive of Investment Management Association.
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