Page 36 - Group Insurance and Retirement Benefit IC 83 E- Book

(Local Government and Public Boards) Interchange Rules 1949, which have been issued

since the paper was written, do not in fact contain this proviso.
8 The Development of Public Superannuation Schemes widows' and children's scheme,

but this is in addition to the ordinary noncontributory superannuation scheme, and not in
any way in substitution therefore.

16. In the event of unification of schemes, it would probably be essential for each branch
of the public service to be treated initially as a separate financial entity, since the ultimate

responsibility for solvency may rest variously with the Exchequer or local rates or

revenues. If, however, comparable wage structures are evolved with the passage of time,
experience may reveal some permissible financial simplification.

17. One incidental advantage of unification of schemes would be the resulting uniformity

of treatment for tax purposes. In the case of funded schemes, tax relief is allowed under
Section 32 of the Finance Act, 1921, The relief in respect of members' contributions

varies according to the degree of approval of the fund (dependent on the proportion of the
contribution which secures the main pension benefit). Contributions returned to the

member are assessed to tax, at one-quarter of the standard rate current at the date of
return, to a similar extent ; under public funded schemes this tax liability is not passed on

to the member.

In the case of schemes which derive from ' public general Acts of Parliament ',tax relief
may be allowed, under Section 31 of the Finance Act, 1922, on the whole of the

members' contributions. Any return of contributions is subject to deduction of the tax
which would have been paid had no such relief been given, i.e. having regard to the

incidence of payment of the contributions. This gives rise to anomalies in certain cases.
For example, for persons subject to the National Health Service modification to a local

government scheme, the tax position as regards members' contributions is as follows.

(a) In respect of the 'approved' portion (the degree of approval being reassessed from 5
July 1948, when the modification became fully effective) full relief is given under the

1921 Act. Tax on returned contributions is borne by the fund.

(b) In respect of the ' non-approved ' portion, full relief is given under the 1922 Act, for a
' 1937 Act' fund (tax being deducted from any return of contributions) ; but no relief is