View more on these topics

Middle class savers face ‘retirement crisis’ from flat rate pension tax relief

Piggy-Bank-Savings-UK-700x450.jpg

The mass market of middle income savers will face a “retirement crisis” if George Osborne decides to introduce a flat rate of pension tax relief, Hymans Robertson warns.

The consultancy says its analysis shows 40 per cent taxpayers currently face the biggest retirement shortfall and will be worse off if the Government backs a flat rate.

While relief would be taken away from additional rate payers this is “justifiable” as they tend to be saving enough, says the firm.

Hymans Robertson partner Chris Noon says: “[A flat rate] also takes tax relief away from higher rate tax payers, which is a problem as this is the group facing the biggest savings shortfalls in retirement.”

Instead, the firm backs capping relief at 33 per cent for higher and additional rate taxpayers and retaining 20 per cent relief for basic rate payers.

It says introducing a flat rate would “not make a meaningful difference”, adding the complications of introducing a new system mean it would take years to bring fiscal benefits to the Treasury.

Noon says: “A capped rate would be a less disruptive change for employers and the pensions industry than a flat rate. A capped rate would provide a better approach for employers in managing retirement provision.

“Both they and the pensions industry are still adjusting to the changes heralded by the pension freedoms less than a year ago. The infrastructure is largely in place to implement a capped rate of relief. Introducing a flat rate, on the other hand, would create considerable upheaval and cost.”

Recommended

Loney-Phil-Royal London-2013

Royal London: ‘Don’t abandon tax relief system’ as pension business soars

Royal London has posted a 40 per cent growth in new life and pensions sales in 2015, as its chief executive warns the Government not to “abandon” the pension tax relief system. In its latest results for the year to 31 December, the provider reports new life and pensions business of £6.8bn, up 40 per […]

hacker
6

Cyber criminals hack HMRC to access tax returns

Cyber criminals are reportedly stealing money by hacking into the systems of HM Revenue & Customs to hijack self-assessment records. The Sunday Times reports that HMRC intercepted approximately 17,000 attempts to make fraudulent or incorrect tax repayment claims, worth nearly £100m last year. However, it says HMRC has been unable to fend off all the […]

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
1

Unbiased award winners on the advice review and tax relief reform fears

Advisers are calling on the Government to ensure the Financial Advice Market Review introduces standard industry charging, while warning a flat rate of tax relief could undermine the pension freedoms. Chancellor George Osborne is expected to outline the Government’s plans for reforming advice and pension tax relief at the next Budget. Plutus Wealth Management chartered […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment