Hornbuckle Mitchell makes plea to protect pensions in LTA cut
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Hornbuckle Mitchell is calling on the Government to introduce additional protection requirements to shield investors if it presses ahead with plans to reduce the lifetime allowance from £1.8m to £1.5m.
The company says the proposed LTA reduction will result in investors being hit with retrospective taxation if their fund value breaches the revised allowance.
When the LTA was introduced in 2006, investors whose pension fund was greater than or likely to exceed the allowance could apply for primary or enhanced protection.
Hornbuckle Mitchell director Mary Stewart says this system must be extended to new pension savers if the limit is reduced.
She says: “The provisional cost analysis quoted for reducing the LTA to £1.5m which envisages a gain to the Treasury of £100m to £200m by 2014/15 demonstrates this is a retrospective tax charge on higher-rate relief rather than just a limitation from 2011 onwards.”
“Those clients with funds of just below the £1.5m mark may need to reconsider any contributions they were thinking of making at least until we have clarification.”
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Readers' comments (2)
David Trenner - Intelligent Pensions | 9 Sep 2010 3:48 pm
Mary,
Those clients thinking of making contributions are fine: they can wait!
What about those who targetted a fund approaching £1.8m when the LTA was first put into legislation, and have now achieved it? Should they get a refund? Should they draw their benefits last year?!
Retrospective legislation without some form of protection would surely breach the Human Rights legislation.
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Norm d'Plume | 9 Sep 2010 4:12 pm
Limits like these help no-one.
I wonder if senior civil servants, judges etc. have a similar charge applied to their final salary schemes?....
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