I need to say something about pensions recycling to make this even remotely relevant, but in reading up about recycling more generally I found some pretty interesting stuff.
According to a recent article, the household recycling rate in England is around 45% (and would seem to reflect the broader UK rate). Although this is a huge improvement on early figures, it has remained largely unchanged in recent years. As such, there is some doubt about whether the UK will achieve its 50% target by 2020. If it doesn’t, apparently Brussels can apply fines of up to £500,000 a day.
The funny thing is, though, one of the key reasons for the recent flatlining is apparently the reduced amount of paper being consumed. In short, it seems we measure recycling purely on output (weight), and paper output has reduced.
I also discovered an artist – Nick Sayers – who makes things from recycled goods. He seems something of a genius and I can only admire his work. You can see the type of thing he does here.
But he, too, is contributing to this supposed ‘reduction’ in recycling, based on the output test.
The recycling in our house is tricky. We live in a busy city street.
The blue and red boxes are collected on alternate Mondays (sometimes) and have very strict rules about what can go in each:
Blue box – bottles (but not other glass or tops), crushed cans and paper (but not cardboard and the paper needs to be in a special blue bag which was stolen months ago).
Red box – plastic (only bottles, not tubs), cardboard (but not paper) and shoes (oddly).
Once you’ve navigated your way through the complex categorisation of your rubbish and put the box out on the pavement (not the steps), one of two things typically happens:
People chuck ‘non-categorised’ stuff on top so it isn’t emptied, and you have more rubbish than you started with.
It’s emptied, turned upside down and then blows away in the wind.
It’s like some kind of strange game we play with the Council where no matter what you do, they always win.
Pension recycling is entirely different.
The Treasury has picked up the tax leakage risks which John Greenwood (Corporate Adviser) has taken time to explore and rightly highlighted in recent months. Put simply, there is an option to recycle income through the pension on a regular basis, up to the limit of £10,000pa, saving tax and NI and benefitting from the 25% tax free cash allowance.
For wealthier clients, this seems like a lot of fuss for a relatively small gain, but you can see how it may be more prevalent when combined with an employer operating salary sacrifice. In fact, just like salary sacrifice, it becomes less of an advice issue and more of a process for operating the workplace pension, tax efficiently.
But the £10k limit has been adopted in an effort to reduce this recycling risk, while still allowing people to contribute where they have taken some of the funds from their pension. It’s not there to wash through untaxed salary. It’s a well intentioned balancing act.
So, the industry (advisers and providers alike) have a decision to make on what we do here. The Treasury has given us a steer when they warned against its widespread usage, suggesting it will need to revisit the rules if that emerges.
If we force this scenario, then we can expect further changes to the £10k limit, if not its removal, curtailing of salary sacrifice, removal of tax free cash, or a host of other things. None of them would be good for anyone, I suspect.
So the decision seems pretty clear to me; we shouldn’t facilitate pensions recycling.
Which brings me to my point, some interesting facts from Tinternet about recycling:
‘Recycling a single print issue of the New York Times would save 75,000 trees’ (that seems far-fetched, but I get the point. Anyway, surely the original print run is the bigger problem).
‘Recycling one ton of aluminium saves four tons of bauxite’ (not sure what bauxite is, but it sounds important).
‘It costs the US taxpayer $500m each year to have litter picked up from highways’ (I wasn’t entirely sure of the relevance of this one).
‘The average office worker uses 10,000 sheets of paper per year’ (presumably, to keep recycling output rates up).
If you have any questions on any aspect of recycling, just let me know (and I’ll Google it).