AJ Bell chief executive Andy Bell has written to the Chancellor calling for a new independent Pension Tax Commission to carry out a root and branch review of pension tax relief.
Bell is calling for a non-partisan group like the Turner Commission, which studied the impact of auto-enrolment, to review the existing pension tax system. Once this is complete, Bell says the Government should freeze the key rules on pension tax relief for a period of 10 years.
Bell writes: “While I recognise tax decision should remain in the hands of the Treasury, we need to build a cross-party, cross-industry consensus on how Government incentives can be best used to boost pension saving in the UK.
“The Turner Commission formed the basis for increasing the state pension age and introducing auto-enrolment, and was a great example of how a non-departmental public body can facilitate a lasting agreement that is able to survive not only Budgets and Autumn Statements, but changes of government.
“That is exactly what is needed around the pensions tax relief framework. A newly formed, independent Pension Tax Commission should have a period of time to assess the existing system and what changes, if any, are necessary.”
Bell says any reform the commission would deliver should be simple, transparent and sustainable, but also encourage greater savings while allowing individuals to take personal responsibility for their retirement.
He argues the lifetime allowance and high-earner taper on tax relief both fail this test.
He says: “Once this review is complete, all political parties could use it as the basis for reaching a consensus, similar to that achieved over auto-enrolment. This should be accompanied by a pledge not to alter the key rules on pension tax relief for a period of time, say 10 years.”