Pensions - Articles - Pensions Tax Relief - Keep any changes simple

 “Pension tax relief provides both an incentive to save and a boost to the value of those savings. Just how effective an incentive it is has been the subject of considerable debate but one thing is certain - it will only work well if people understand it.

 “Ten years ago when pension simplification was introduced, the amount that could be saved in a pension was limited; an Annual Allowance (AA) on the way in and the Lifetime Allowance (LTA) on the way out. Had those allowances been left untouched we might actually have achieved the desired simplification by now but instead both have been subject to continual changes in value and we have seen the added complications of the Money Purchase Annual Allowance, taper relief and the various protections that came with each change.

 “Royal London is strongly opposed to any further government tinkering with pension tax relief. Age-related tax relief might provide an incentive for younger savers but could hinder understanding and appreciation of the tax incentives for the population as a whole. If the system is to be changed then this should be as a result of proper research and consultation and where possible, avoid adding any further complexity, however well-intentioned.
 
 “ If changes are to be made keep it simple and then leave well alone.”