Pension savers need to act to take the tax relief while it lasts
Middle class savers need to act now on retirement savings before George Osborne introduces the flat-rate of pension tax relief, warns the boss of one of the world’s largest financial advisory organisations.
The warning from Nigel Green, deVere Group CEO and founder, comes as the Chancellor plans to dramatically overhaul the pension tax relief system by implementing a flat-rate of between 25 and 33 per cent.
Mr Green comments: “It’s expected that in George Osborne will abolish the system that provides individuals tax relief on contributions in line with their marginal rate of tax in this year’s Budget.
“Those paying higher rates of tax have traditionally been awarded more relief on their retirement savings. It would seem this time-honoured practice is to be axed.
“Therefore, middle class savers who have been prudently putting money aside for their retirement are going to be hit by Osborne’s plans.
“Millions of people, who currently receive between 40 and 45 per cent relief, could see a significant drop in their retirement funds.”
He continues: “With the Chancellor expected to announce the changes in the Budget in March, the time for higher earners to act is now. Take the tax relief while it lasts.
“Those seeking to make larger one-off pension contributions to make the most of their retirement savings might be wise to consider doing so sooner rather than later.”
Mr Green adds: “This tax attack on pensions illustrates once again that the British government, which needs to bolster its coffers, views people’s retirement savings as easy targets.
“It’s pretty easy for the government to make the case to attack pensions as there’s a good deal of money in them, most of it belongs to the better-off part of the population, and they get tax relief.’’
He goes on to say: “This move by the Chancellor seems incredibly short-sighted. We should be incentivising saving now more than ever as retirement planning increasingly becomes a personal responsibility and as the country needs a financially secure older population for its long-term sustainable economic growth.”