CIPP response to the consultation on Pensions Tax Relief

29 September 2015

The CIPP has submitted its formal response to HM Treasury following the consultation on pensions tax relief.

The response was based on the replies to an electronic survey which was issued to CIPP members.

Summary of key findings

  • 55% of respondents feel that the current system of tax relief is complicated;
  • 64% of respondents believe that the complexity of the system undermines an individual’s incentive to save for their retirement;
  • 45% of respondents believe that a simpler system will result in greater engagement with pension savings;
  • Despite many suggestions for simplification, there is no common agreement on an alternative option;
  • Only 21% believe that a different system would allow greater personal responsibility for adequate pension saving, with 62% unsure; and
  • An even greater number of respondents (71%) were unsure whether an alternative system would allow individuals to plan how they would use their savings in retirement.


Although there is broad agreement that the current system of tax relief on pensions is complex and not widely understood, it is clear that there are a wide range of opinions on how this could be simplified. Without an alternative proposal to consider there is no common agreement as to whether changing the taxation regime will encourage more individuals to save for their retirement, with much of that uncertainty depending on what that alternative proposal would be.

There is however a common theme running which is that, regardless of the chosen taxation method for pensions, having a simple system communicated clearly will have the biggest impact on pension saving.


With the knowledge that complexity and lack of understanding have a major impact on pension savings, this should be at the forefront of government minds when considering how to address this issue.

Whilst bearing in mind that the current system may prove to be the most preferable, the CIPP recommends that government uses the suggestions for reform generated by this consultation and publishes a further consultation based on the most practical and straight forward proposals. The consultation should include a series of scenarios setting out the impact each proposal would have on varying groups of individuals, such as basic rate taxpayers, higher rate taxpayers etc. with a clear outline of how it is envisaged each option, including the current system, would work. This would enable stakeholders to make more informed assessments of how best to incentivise individuals to save for retirement.

The full response is available to view and download through the link below.

CIPP response to consultation on Pensions Tax Relief - September 2015