Matthew Phillips, Managing Director at Broadstone Pensions & Investments Ltd, responds to the Chancellor’s decision to cut pensions tax relief:
“By cutting the annual allowance the Chancellor will make no difference to the country's finances. However, he has succeeded in sending out a completely mixed message on pension saving. A major problem for people in this country is how to fund their retirement by making adequate provision for themselves rather than relying on the state.
“We absolutely have to encourage pension saving in this country as this will make the necessary changes to the state retirement age far more palatable. The state retirement age is likely to move towards seventy at some point due to increasing life expectancy rates and improved living standards in our retirement. The downside is that the state and the shrinking proportion of tax payers will not be able to fund this.
“We need to save for our future and start now. Any statistic that you care to look at tells us that pension provision is not high enough. Why make pension saving seem less attractive to individuals when the outcome is such a small return for the Exchequer? If the government is concerned about the wealthy "getting away" with
tax relief, why not lower the amount but increase the relief for everyone to encourage saving?
“Successive governments across the political spectrum continue to mess around with pensions, adding legislation and then wondering why individuals don't understand them. In 2006, we had pension simplification but since then politicians have reverted to type and enacted several changes to pensions. If Broadstone could ask one thing of politicians it would be to make a final decision on pensions and then leave them alone.
“The Chancellor’s decision to cut pensions tax relief seems like gesture politics and unfortunately the need to provide for our futures could well do without it.”
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