The National Association of Pension Funds (NAPF) has welcomed the Government’s alternative proposals to restrict pensions tax relief for those on higher incomes but warned that ‘unintended consequences will punish savers who are not high earners’.
A significantly reduced annual allowance possibly between £30 000 and £45 000 would replace the complex provisions introduced by the Labour administration and enacted in FA 2010. The consultation paper is available via www.lexisurl.com/6TUlg.
The NAPF said the current proposals risk ‘unfairly penalising’ those who are promoted or made redundant or who have to retire early because of illness.
The inclusion of “past service” into the planned tax workings will ‘hit those with final salary pensions who have spent a long time with their company ’ the NAPF added.
‘These individuals could find that a new assessment of their defined benefit or final salary pension benefits leaves them...
