UK DB Pension Schemes lost £256m in 2019

UK pension schemes, as tax-exempt investors, are entitled to reclaim withholding tax (WHT) from equities under double-taxation agreements. New research conducted by Broadridge Financial Solutions on behalf of AMX and Northern Trust has identified a potential loss of up to £2.4bn over the next 10 years.

Tax efficiency has become an important factor in fund performance in recent years – particularly for UK DB Pension Schemes who may be paying too much WHT on the dividends from their pooled equity investments.

Key findings:

  • £256m was wasted in 2019 by being in the wrong fund structure
  • 72% of private UK DB schemes are using tax inefficient fund structures
  • 69% of these were unaware of how tax-efficient structures could benefit them.

120 UK DB Pension Schemes, ranging in size from £1m to £30bn, were interviewed to uncover just how big an issue the use of incorrect fund structures is, and what can be done about it.

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