UK higher earners have opportunity to review their pension tax relief position
Britain’s higher earners have “an extended window of opportunity” to consider reviewing their pension tax relief strategy, affirms the chief executive of one of the world’s largest independent financial advisory organisations.
The comment comes from Nigel Green, deVere Group CEO and founder, following today’s Autumn Statement, the Chancellor’s third package of fiscal policy measures this year.
He observes: “George Osborne had previously said that he will confirm the outcome of a pension tax review in March next year – and cuts are widely predicted.
“More recently, it had been forecast that to avoid a rush of money into pensions from Britain’s top earners, understandably keen to take advantage of the higher tax relief, Mr Osborne could set out immediate steps to stop this from happening in the Autumn Statement. This didn’t happen.
“However, let’s be clear: this tax raid is indeed more likely than not to take place in the near future. It can be reasonably expected that the Annual Allowance will be slashed from £40,000 to £10,000 for many higher earners and there will be hefty tax charges for anyone who goes over the threshold.
“As such, 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 whilst they have this extended window of opportunity.”
Mr Green adds: “If this does go ahead, which we expect it will, the move would be another example of how pensions are a victim of the government’s war on success. It’s another bloody nose for those who want to get ahead in life through hard work and prudently saving for their future.
“It punishes saving when it has never been more important to do so and as it increasingly becomes a personal responsibility. We’re all living longer, meaning savings need to last longer, debt levels are high, care and health costs are climbing, and there’s a considerable lowering of the generosity of most pensions.
“Considering the serious negative consequences for the country and for families of an increasingly older population with few financial resources, it seems naïve in the extreme not to incentivize savings as much as possible.”