The National Association of Pension Funds has set up a working party to lobby against the Government’s restriction to tax relief on pension contributions and is calling for the annual allowance to be reduced to between £45,000 and £75,000 instead.
Senior policy adviser David McCourt says the Budget move to taper relief for people earning over £130,000 will undermine pension saving generally, adding it is “likely to be the thin end of the wedge”.
McCourt instead proposes reducing the annual allowance from 2010/11 levels of £255,000 to a range falling between £45,000 and £75,000, depending on length of service.
He says this approach would be far simpler and would not increase admin for employers. He adds that the reduction would not affect the majority of individuals but would prevent harmful knock-on effects.
McCourt says the NAPF is preparing a response to the Treasury outlining how the changes are “harmful and misguided” and insists the association will “use all channels” to make the case against the restriction.