Pension schemes and the ‘alternative approach’

SPEED READ HMRC has published its discussion document on the ‘restriction of pensions tax relief’. The favoured alternative to the High Income Excess Relief (HIER) charge involves substantially reducing the annual allowance. This would mean the making of tax-efficient contributions remains possible even for the highest earners although there is likely to still be pressure for ‘top up schemes’ for those higher earners. Given the Government’s statement that it requires the alternative measures to provide as high a yield as would have been the case with the HIER charge, ‘top up schemes’ that reduce current tax take could be subject to anti-avoidance measures. A post-tax wealth accumulation scheme offering efficiency and flexibility may be an attractive solution.