NAPF has commented on Labour’s plan to restrict pensions tax relief

NAPF has commented on Labour’s plan to restrict pensions tax relief

The National Association of Pension Funds (NAPF) has commented on Labour’s plans to restrict tax relief on pension contributions, announced by Rt Hon Ed Miliband in his speech at the Leeds College of Music.

Joanne Segars, Chief Executive, NAPF, said: “These incremental shifts in pension tax policy are not the right way to manage the future retirement savings of millions in the UK. Such a move by any government threatens to undermine the confidence of pension savers, employers and schemes alike. These changes are likely to affect many middle-income savers, such as senior nurses and senior teachers.

“This is not an issue on which any future government can afford to make knee-jerk policy decisions upon. We need a proper debate on tax in the broader context of pensions and retirement savings, and this should be overseen by an Independent Retirement Savings Commission to ensure the long-term needs of savers remain at the very heart of the Government’s approach.”

Labour’s proposals are basically to:

  • Cut tax relief on incomes over £150,000 from 40% to 20%.
  • Lifetime Allowance to be reduced from £1.25 million to £1 million.
  • Annual Allowance to be reduced from £40,000 to £30,000.

These figures are still considerably higher than the average defined contribution pension. The lifetime allowance is over 25 times higher according to labour and the annual allowance 10 times higher than the average contribution.

Categories: News, UK Pensions
Tags: NAPF, Tax

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