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Selective blindness on rate relief

Politicians who call for the axing of higher-rate relief on pension contributions always fail to see the elephant in the room (July 13 article in Money Marketing.

The best-pensioned sector of the population is that which enjoys the defined benefits of good employer-subsidised DB schemes. The massive contributions and top-up subsidies that are paid into these schemes by private sector employers and state sector organisations completely bypass the income tax and National Insurance collection systems.

Because of this bypassing, these benefits would be unaffected by any axing of higher-rate relief on contributions. It would be unfair to cut back on tax relief for those employees (and the self-employed) who have to make full, unaided pension provision from their own resources while leaving untouched the massive reliefs enjoyed by others.

Top politicians and top civil servants are among those that benefit from these tax-free and NI-free funding arrangements for defined-benefit schemes. This great benefit that they would continue to enjoy might explain their selective blindness when they speak of axing higher-rate relief.

Paul Dare
London SW13

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