A quarter of respondents (25%) want to keep the current system of income-linked tax relief, while almost as many (22%) would favour moving to a flat 25% rate. This near tie highlights how finely balanced the debate over pensions reform has become, and underscores the challenge for policymakers as the Autumn Budget approaches.
Support for the current system climbs with income, from just 20% of those earning under £15,000 to 41% of those on £45,000-£49,999. Yet among the £100,000+ earners, those with the most to lose from any reform, backing for the status quo drops to just 16%, with 73% favouring a flat rate of at least 25%. This reveals a surprising appetite for change among top earners, which may reflect a desire for simplification. Age also plays a major role, with 37% of 55-64 year-olds wanting to retain the current system compared to only 14% of 25-34 year-olds.
The research also exposes how views on tax relief align with wider attitudes towards retirement policy. Those in favour of maintaining income-based tax relief are also the most likely to want to keep the triple lock (31%) signalling a preference for preserving existing structures. In contrast, those supporting a change to a 25% flat rate for tax relief are the most likely to back replacing the triple lock with inflation-only uprating (43%), perhaps hinting at greater awareness and a growing concern among higher earners about the sustainability of generous state pension increases.
Taken together, the findings do not suggest that there is a clear appetite for reform to tax relief, rather they reveal deep uncertainty about the system itself. With the Budget on the horizon, the data highlights the political sensitivity of reform, and highlights the risk of creating more confusion for savers should the government tinker with pension tax relief.
Lisa Picardo, Chief Business Officer UK at PensionBee, commented: “These findings highlight the delicate balance at the heart of pension policy. Pension tax relief is a critical incentive to help people save for their future and reduce sole reliance on the state, yet we know many are still not saving enough and tomorrow’s retirees risk having less to live on than today. With pensions already complex to navigate, further changes risk adding confusion and creating unintended consequences, especially as the public remains divided on the best way forward.
Rather than the Chancellor tinkering with pension tax relief which risks damaging public perception, what’s needed is clearer communication and greater transparency around its benefits, so that savers have a stable environment in which they can make long-term decisions and plan for the future with confidence.”
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