Consultation on pensions tax relief
10 July 2015
As announced in the Summer Budget the government is consulting on whether there is a case for reforming pensions tax relief to strengthen incentives to save and offer savers greater simplicity and transparency, or whether it would be best to keep with the current system.
The publication - Strengthening the incentive to save: a consultation on pensions tax relief will run until 30 September 2015.
The government will consider all responses and publish a ‘summary of responses’ which will set out how they intend to proceed.
Watch out for a survey on this as the Policy Team shall be asking for your views to inform the CIPP’s response. In the interim, to get you thinking, there are eight questions asked in the consultation:
1. To what extent does the complexity of the current system undermine the incentive for individuals to save into a pension?
2. Do respondents believe that a simpler system is likely to result in greater engagement with pension saving? If so, how could the system be simplified to strengthen the incentive for individuals to save into a pension?
3. Would an alternative system allow individuals to take greater personal responsibility for saving an adequate amount for retirement, particularly in the context of the shift to defined contribution pensions?
4. Would an alternative system allow individuals to plan better for how they use their savings in retirement?
5. Should the government consider differential treatment for defined benefit and defined contribution pensions? If so, how should each be treated?
6. What administrative barriers exist to reforming the system of pensions tax, particularly in the context of automatic enrolment? How could these best be overcome?
7. How should employer pension contributions be treated under any reform of pensions tax relief?
8. How can the government make sure that any reform of pensions tax relief is sustainable for the future?