Pension tax relief reform with flat-rate below 30%

Enable's Independent Financial Advisors are often asked to clarify the tax relief position on pension contributions and drawdown.  Last month, the Centre for Policy Studies (CPS) published a report that set off the debate over the future of pensions tax relief again. The CPS policy paper argues that the system we have at the moment– where contributions and investment growth are tax-free but retirement income is taxed – is unfair and tends to benefit the wealthy.

The CPS think-tank says tax relief should be scrapped altogether and replaced by a Treasury contribution of 50p per £1 saved. This would be subject to an annual allowance of £8,000, with prior years’ unused allowance permitted to be rolled up over a period of up to 10 years.

Pension tax relief looks as if it will play a significant part in next years general elections and the implications need to be considered.

There are of course inherent difficulties for each political party to address  in reforming the pensions tax system, but it would seem that the overall  political consensus is beginning to suggest that the current rules need readjusting to make them fairer. Deciding just how, when and what is to be done is still unclear and is likely to generate a fair amount of debate over the next year.  If you want to talk thought how any of these possible changes might affect your pension saving plan Enable of Bishops Stortfords IFAs are happy to talk you though your saving for retirement options.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
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