My answers - all I admit researched between 9.00 and 9.45am this morning - are on the Guardian web site.
It's not less than £840 million. It could be somewhat more if we pushed the cap downwards.
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I don’t think pension tax relief for higher earners should be abolished, but I do think it should be restricted to basic rate. Higher rate tax relief effectively means the Government contributes more to their pensions than it does to the pensions of basic rate tax payers. It’s an anomaly that should have been eliminated a long time ago.
We agree
No get out clause – I like it.
My approximation is £900m, so in the same ball park.
The difficulty here is how they seek to do it. The original restriction of relief for high earners by the last government was staggeringly complicated. It was eventually scrapped in favour of reducing the annual allowance. Surely they wouldn’t suggest something similar?
Preventing claims for higher rate relief through self assessment would be the easiest option, but that would effectively target the self employed as employers largely operate salary sacrifice arrangements (and if they don’t they soon will).
The problem with restricting relief when it comes to pensions is the diversity of provision. It is so difficult to design a method that fairly targets everyone without making it hugely complicated.
The alternative is to remove the 25% tax free lump sum for some people. The timing would be critical and it may prompt a wave of retirements.
Neil
Glad we’re in the same ball park
Agree the rules may be complicated
Denying all higher rate relief would be #1
A cap on company contributions would be essential too
Richard
Whether or not one agrees with measures such as a proposed restriction on higher rate tax relief, no 25% tax-free lump sum, cap on company contributions or whatever, the fact is that successive governments have piddled around with the pension systems for too long and will almost certainly continue doing so.
It is generally agreed that there is a pensions crisis in this country. Yet how does more piddling around give pension scheme members any more certainty? The 25% tax-free lump sum may or may not be a reasonable provision, but how on earth can you reasonably expect people to have confidence in the pension system if the government were to suddenly abolish it? And if people don’t have confidence that the government won’t suddenly snatch away what they fairly or unfairly consider to be their nest egg, then this will have a hugely adverse affect on pensions in this country at a time when it is least needed.
Of course there are other issues facing pensions: poor equity returns, allegedly high fees (although I personally have no problem with the 1% charge that I pay; I don’t know who these people are who moan about charges but they are clearly in the wrong scheme) and so on. But the simple fact is that we have become a nation on credit in the last 15 years, spending everything we earn and saving very little or nothing. Fifty years ago virtually everyone would have saved 15% of their gross salary. Many people now save 5% or less of their gross salary – and half of those in the private sector have no pension provision at all. Sorry, but you can’t then complain that your pension has perfomed poorly when you’ve saved that little over 15 years. Half the stuff you bought on the credit card was probably totally unnecessary – you should have put it into your pension. And we haven’t even started to consider life expentancy.
Surely the reasoning behind it is that tax relief now is offset to some extent by the fact that your full annuity/pension is taxable despite a large portion of it being a return of capital. If I put £100,000 into a pension today and receive an annuity tomorrow, almost all of it will be capital and will be taxable.
So someone putting more money in now, is more likely to be paying a higher % of tax in the future and hence gets a higher deducton now.
Just go and buy an annuity then
ASkip the tax system
That’s your right
Remember pensions are just a savings scheme
Right now a heavily tax advantaged one for the rich