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ACA says Govt should consider capping high rate pension tax relief

The Association of Consulting Actuaries has said the Government should consider a cap on high rate pensions tax relief and invest the money in better promotion of pension saving for everyone.

Speaking at the ACA dinner yesterday, chairman Keith Barton warned that personal accounts are unlikely to offer a prosperous retirement for the majority of members.

He said: “Unpopular as this might be with the higher paid, we might need to look at whether higher rate pension reliefs are capped to part-finance this, but – more important – all of us, including our politicians, need to recover our confidence that financial incentives can and should be used to shape and drive desirable outcomes.”

Barton said personal accounts should be seen as “the scheme of last resort for those employees unable to access better arrangements”.

He warned that the Government needs to do more to encourage good employer schemes by updating legislation to allow new risk-sharing arrangements.

He said: “Unless legal changes are made soon, the vast majority – thousands of pages of pension legislation and regulation – will be relevant to an increasingly small number of private sector pension schemes covering fewer than 10 per cent of the workforce.

“One cannot help feeling that much of our pension energy now seems more about managing the slow death of quality schemes.

“It is not about building a framework to promote the growth of new quality schemes. That is not far short of a disgrace.”

Barton added that unless the Government does more to promote good quality employer schemes the number reliant on means-tested benefits will increase.

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