Employee Rewards and Benefits News
Consultation on pension tax relief lowers annual allowance
The outcome of the government's deliberations over the tax relief granted to pension savings has resulted in a lower annual allowance.
Pension savers are likely to feel the sting as the yearly tax-sheltered pension savings limit is reduced to £40,000, in comparison to the previous figure of £225,000.
Although, the changes are likely to benefit workplace pension schemes, the brunt of these will be borne by workers in final salary schemes.
Pension industry experts have urged the government to keep things simple as ministers are beginning to run the risk of over-complicating the process of saving into pension schemes.
Chris Noon, partner at Hymans Robertson, said: "The suggestion that tax-relief on pension accrual below the annual allowance could be limited to 40 per cent is probably a step too far.
This could be damaging, reintroducing some of the complexities of previous government's proposals. The government should keep the tax system clean and simple."
Posted by Anisha Ahmed
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