“Regressive” Pension Tax Breaks May Be Removed For UK Executives
MPs are planning to scrap the “regressive” pension tax breaks for higher earners despite claims that UK executives from big companies intend to stop saving for their pensions.
Chancellor George Osborne had shot towards pension tax relief for executives and said that UK executive pensions may become a thing of the past
Pensions Expert and now-Pensions Minister Ros Altmann confirmed the government is considering abolishing the remaining special tax relief of high earners as part of a pensions review.
She said she will be deliberating with the government regarding having a flat rate of tax relief. However, she said the review as “genuinely open” and maintaining the status quo was an option.
Osborne had moved in towards restricting pension tax and it would come into full force the following year. Analysts said it would be the ‘death’ of pension arrangements for UK executives. FTSE surveys indicate that the trend of business executives moving away from pensions will accelerate further due to new curbs on top-end tax relief from.
The new changes will have UK executives with adjusted annual income of more than £150,000 subjected to a tapered annual pension saving allowance. People with incomes of £110,000 can get caught if their pension contributions push them over their limit.
According to former UK Pensions Minister Steve Webb, the idea was ‘bonkers’. Having every £2 of income an individual has over £150,000, their annual allowance is reduced by £1 until it falls to £10,000 for those earning more than £210,000.