The Pensions and Lifetime Savings Association (PLSA) commends the
Chancellor for favouring stability over change in his approach to
pension tax in this Budget.
With over 10 million more people saving into the pension system
as a result of automatic enrolment, aside from addressing
significant anomalies in the system, stability is vital to
instilling confidence and encouraging everyone to save for the
future.
The PLSA welcomes the Government’s plans to call for evidence to
address the anomaly that sees more nearly two million low earners
missing out on tax relief on their pension contributions through
no fault of their own. Of the affected population, over 75% are
female.
The PLSA has long called for this review and has done a
considerable amount of work to find a solution to this issue and
looks forward to engaging with the consultation. The problem can
be addressed via a modification to HMRC’s ‘p800 process.’
We also note the Government has substantially raised the
threshold at which the annual allowance taper kicks in, for the
public and private sector, to £200,000 from £110,000. This will
help reduce the complexity of pensions for the vast majority of
people affected.
Nigel Peaple, Director of Policy and Research, PLSA,
said: “We are pleased the Government has opted for a sensible, no
surprises Budget that can give people confidence to save. Small
but vital changes to the rules regarding the annual allowance
taper and the net pay anomaly remove complexity and confusion. On
the latter, we strongly urge the Government to adopt the simple,
HMRC-based solution, supported by the pensions sector.”
