Commenting on reports that George Osborne is considering reducing the tax relief available for pensions in the forthcoming Autumn Statement, Marc Hommel, pensions partner at PwC, said:
"Further cuts in tax reliefs available on annual pension savings would have significant consequences. Employers will further accelerate the closure of defined benefit pension schemes as they become even more complex and expensive to run, and through fatigue with constant changes to the tax treatment. There will be reduced employer and employee savings into retirement arrangements as trust continues to erode in the robustness of the pensions savings landscape.
“This is likely to adversely affect all employees, not just higher earners. With recent uncertainty over the tax regime and other features such as auto-enrolment currently being implemented, business and employees alike need a sustained period of minimal changes to the pensions regime."
Commenting on how any change to the annual allowance for tax efficient saving could affect individuals, Alex Henderson, tax partner at PwC, added:
"As well as undermining confidence in the stability of the pensions system for everyone, reducing the annual allowance could penalise those who deliberately planned to increase pension savings later in life, rather than save a little each year. Depending on the level set and their salary and employment profile, there could also be complications for defined benefit scheme members who could face an annual benefit-in-kind charge on their increased benefits."
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