25 February 2010
The National Association of Pension Funds (NAPF) has set up a
working party to lobby against the Government's changes to tax
relief on pension contributions.
The NAPF is calling for the annual allowance (currently at
£245,000) to be reduced to between £45,000 and
£75,000. Senior policy adviser David McCourt said that the
Budget move to taper relief for people earning over £130,000
will undermine pension saving generally. Mr McCourt said this
approach would be far simpler and that generous tax breaks for
wealthy pension savers should be slashed in the next budget. This
would save the exchequer millions of pounds, simplify complex rules
on retirement saving due next year and would not increase admin and
costs for employers.
McCourt says the NAPF is preparing a response to the Treasury
outlining how the changes are "harmful and misguided" and insists
the association will "use all channels" to make the case against
the restriction.
Last year the chancellor said a 50p tax rate would apply to
earnings over £150,000 from April. He also said income tax
relief on pension contributions by individuals would be tapered
from 50% at £150,000 a year to 20% at £180,000, from
2011.
NAPF Chief Executive Joanne Segars added:
"As recession-hit companies assess the cost and complexity of
the pension they offer their employees, the government must abandon
its unworkable pension tax plans, which will only damage pension
provision in the round. Our approach to pensions taxation will
avoid the arbitrary and unfair effects of the government's
proposals - too many people outside the government's target income
group are at risk of facing high tax bills just for saving in a
pension scheme."
