With pretty dismal returns over the past 8-9 years tax relief is the one thing that makes saving in a pension attractive.
It is hard to see them halving the rate, I assume this means reducing it to the lower (currently) 20% band. They were only last year talking about topping up pension contributions for lower earners to give them 41% relief.
I for one would stop contributing to my pension fund, if this happened. Even before the last couple of weeks madness, over the last 10 years I would have been better off just sticking the money in a high interest account. The tax relief if the only thing that makes it worth while. Even then they would still be taxing my pension when I retire, better to pay tax now and have full control over the money.
Having contributed to a personal pension for the last 10 years my retrurn has been less than 2 percent and i have stopped contributing, preferring to stick it in the piggy bank.It is hard to see them halving the rate, I assume this means reducing it to the lower (currently) 20% band. They were only last year talking about topping up pension contributions for lower earners to give them 41% relief.
I for one would stop contributing to my pension fund, if this happened. Even before the last couple of weeks madness, over the last 10 years I would have been better off just sticking the money in a high interest account. The tax relief if the only thing that makes it worth while. Even then they would still be taxing my pension when I retire, better to pay tax now and have full control over the money.
Apart from the obvious and extreme policy ramifications, I don't see how they can do this, unless they also make employer pension contributions subject to BIK, with standard rate relief applying to the total contribution (subject to overall limits as before or amended).
Otherwise, it would leave the system wide open to manipulation for those in employment, particularly proprietors of small businesses.
They would also have to change the whole net pay system that currently applies in the public sector and in most private sector schemes.
Regards
Homer
I understood that Defined Benefit schemes were now few and far between and employers have been moving to defined contribution instead as the costs are far lower for the employer.Are mos private sector schemes DB?
Are mos private sector schemes DB?
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