The US Internal Revenue Service (IRS) must make it crystal clear that workplace pensions will be exempt from the Foreign Account Tax Compliance Act (FATCA) to avoid creating confusion among pension schemes, the UK’s biggest pensions trade body urged today (Mon).
In its response to the IRS consultation on the proposed US Treasury FATCA regulations, the National Association of Pension Funds (NAPF) welcomed the IRS’ intention to exempt retirement plans from the new regulations.
However, the body warned that the exclusion for schemes as currently outlined in the proposals is not clear enough, and could create uncertainty among pension schemes.
Darren Philp, NAPF Policy Director, said:
“We are very pleased that pension funds will be exempt from the new regulation and that the IRS listened to our concerns. Without such an exemption, pension funds would have been required to set up systems to identify the benefits accrued by U.S. nationals and to tell the IRS about them. This would have been extremely costly for pension funds and completely unworkable.
“However, we are concerned that this exemption is not yet absolutely clear. This could cause confusion among schemes which could, one day, face the possibility of having to comply with the new law. We urge the IRS to ensure the exclusion for pension funds is watertight.”
Under the original proposals, ‘foreign financial institutions’ would have been required to monitor and report to the IRS the details of US citizens to identify potential tax evaders. And a 30% withholding tax would have been imposed on the US assets of any institution that did not comply.
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]