The Chancellor’s Summer Budget looks to prepare the pensions world for still more major change. We shall all need to do some serious thinking over the summer about how to respond to his thoughts on replacing upfront tax relief on pension contributions with exemption from tax for pensions in payment.
We should perhaps resist being heavily influenced by the further complexities being introduced now to the current model. Despite appearances, they are probably not there principally to nudge us to favour the bolder proposals for the future.
The material the Government published on Budget Day suggests indeed that they are seeking to minimise the burden that the tapered annual allowance will impose on scheme administrators. It is, rather, taxpayers who, if they fall within the target group, will find it substantially more difficult to work out in advance how their tax bill will be affected by pension contributions made by or in respect of them – not that it is always easy now.
At this time when trustee bodies have so much other pressing business, what they should certainly resist, however, is the devotion of resource (in time, let alone in money) to tweaking scheme rules or practice in any bid, of uncertain efficacy, to provide mitigation (read, more or less aggressive avoidance) of the tax burden on that usually tiny proportion of their active members who have six figure incomes.
Pensions Age article
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