The Inland Revenue is using the partial concurrency rule to stop people whose final-salary schemes have closed from making alternative retirement provision.
The Revenue has ruled that members of final-salary schemes closed to future accruals fall under partial concurrency regulations because their benefits grow as their salary increases.
The Revenue says members will be treated as accruing benefits in an occupational scheme where the final salary against which their entitlement is calculated continues to grow.
This means individuals earning over £30,000 become subject to concurrency rules that mean they are not allowed to save in a stakeholder or personal pension.
IFAs have slammed the Revenue's ruling as nonsensical and say it could lead to people who have mistakenly bought personal pension products having them unravelled and facing a tax bill.
The rule also means that people in these schemes are worse off than those whose employers have frozen benefits altogether and do not allow salary indexation.
An Inland Revenue spokesman says: “As a result of the way that some final-salary occupational pension schemes have been closed, it does prevent some employees from being able to contribute to pension schemes. We continue to listen to the concerns of the representative bodies and look for a solution.”
Central Financial Planning director Ian Smith says: “This is crazy, as if people were not already anti-pension enough. They are going to think even less of pensions. The Revenue's decision is totally counter-productive.”