8 April 2010 Last week's budget confirmed that the government was pushing ahead with proposals to restrict pensions tax relief for high earners (broadly those earning over £150,000).

The 2010 Finance Bill has just been published and it includes an anti-avoidance clause relating to avoidance of the high earner's pension tax charge. The clause is drafted widely and effectively unscrambles any arrangement whose purpose is to avoid the new high earner's pension tax charge and compensate the employee for not being in a registered pension scheme.

Many employers have been thinking of introducing Employer-Financed Retirement Benefits Schemes (EFRBS) to mitigate the effect of the high earner's pension tax charge. The new anti- avoidance provision seems to prevent the introduction of a new EFRBS, but it does not seem to prevent the continued use of existing FURBS (Funded Unapproved Retirement Benefits Schemes) or UURBS (Unfunded Unapproved Retirement Benefits Schemes).

Martin Scott, a partner in Mayer Brown's Pensions group, commented
: "The government is really clamping down on high earners here. When the earnings cap was introduced in 1989, there was no anti-avoidance legislation and a crop of top-up schemes emerged. This time we have a radically different approach and the use of top-up schemes will be restricted."

For more information, contact:
Charlotte Ward
PR Manager, London
+44 20 3130 8547