UK’s high earners could shun pensions: Experts

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13 Mar, 2014

UK’s high earners could shun pensions: Experts

Earlier this week, Shadow chancellor Ed Balls put forth a proposition to cut pension tax relief by half for those making over £150,000 to 20%. Experts and financial advisers have banded together on this idea saying that the current attempts to limit pension tax relief may put higher earners off saving for their pensions.

Paul Taylor, managing director of financial advisers McCarthy Taylor, said that a tipping point has virtually been reached. “Pensions are still, on paper, the most effective way to save but if governments keep on interfering then soon there won’t be pensions,” he added.

Apart from the potential capping of tax relief, the new tax year will also see annual and lifetime allowances drop. This has led many to seriously question the benefits of saving money for their pensions.

“People fear that the rules will change and they won’t be able to do anything about it because pensions are a one-way street,” Taylor said.

Ros Altmann, a pensions expert and former government adviser, said the UK “has the most inflexible pension system in the world” and this positively overshadowed the tax breaks available in the minds of some.