Given that it was a well publicised maybe even over publicised budget there was no surprise that the Chancellor did little to interfere with pensions as expected. At Enable Independent Financial Advisors of Bishop’s Stortford we were keen to consider any changes to pensions. It seemed unlikely that there would be a withdrawal of higher rate relief for pension contributions – the Chancellor would have found it hard to respond to calls to cut pension tax relief, not least because the current system was only put in place in April 2011.
Withdrawing higher rate relief would be much more complex than it might at first appear. The way in which Defined Benefit schemes work could mean employees in such schemes could end up with a big pension and low earnings. Some public sector schemes aren’t funded, so levying a charge which is then borne by taxpayers raises no money at all. There’s also a problem with Defined Contribution schemes. Cutting tax relief could mean many put in less money. However, many schemes operate on a matched contribution basis, cutting an employee’s contributions would also cut the employer contribution. Another option being floated would be a cut in the amount that could be put into a pension scheme each year; currently this is £50,000. If you have cash that you might be considering putting into your pension Enable’s Independent Financial Advisors would be able to help you consider your options..
No comments:
Post a Comment