Advisers do not understand the current pension tax credits system, says Pension Commission chairman Adair Turner.
Publishing his report into UK pensions, Turner said IFAs are as in the dark as consumers about tax credits which has led to a false belief that the highest earners are the best incentivised to save.
Turner says: “When you look at tax credits, those who are eligible can have very high incentives to save but the problem is almost none of them and almost no IFAs know this.”
Central Financial Planning adviser Ian Smith says: “It is a crazy situation where you have to work tax credits out on one year's earnings and this is paid the next tax year. An inc-rease in salary the following tax year can lead to the Government taking it back off you. How are you supposed to plan around that?” Turner warning, p3