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Pension tax reforms too complex

Pension tax reforms too complex

The Association of Consulting Actuaries has slammed the government for the “complex” nature of its new proposal for pension tax relief reforms for high earners.

They say that not only are the reforms complex, ill thought out and costly to implement. They will also harm the pension prospects for those on lower incomes.

Whilst understanding the need for the government wants to raise additional revenue, the chairman of the organisation, Keith Barton, believes that basing this on an income threshold is going to prove highly inefficient.

The new reforms are aimed at about 300,000 people earning over the threshold of £130,000 but the fear is that more good schemes are going to close as a result and this will directly affect hundreds of thousands of employees.

Some employers are already proposing to withdraw pensions as part of a pay package due to the risk that they might trigger the new tax. There is also a concern that redundancy payments could result in a large tax bill.

The ACA and many contractor accountants now believe that the scheme proposed by the NAPF should be given serious consideration. The NAPF scheme involves the government lowering the limit on pension savings that qualify for full tax relief. At present the figure stands at £245,000 a year and they are calling on this to be reduced to between £45,000 and £60,000.

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Image: Fatal by marmota

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