Pensions - Articles - SPP and JLT Employee Benefits comment on pension tax relief

 “Most generous defined benefit schemes are now mainly the preserve of public sector workers. Given that Members of Parliament and Civil Servants enjoy defined benefit pensions, it will be interesting to see how a Pensions ISA system would be transitioned in and how defined benefit schemes may be taxed differently to Pension ISAs.” 

 Phil Wadsworth, Director, JLT Employee Benefits: “Pensions ISAs are not the magic solution that George Osborne will have us believe. They are a much deeper assault on pensions than even Gordon Brown’s abolition of dividend tax credits.

 “Pension taxation is a complex concept, which many employees simply don’t understand. Pensions ISAs sound attractive because of their simplicity, but such a move to this style of system would immediately remove the huge benefit under the current tax regime of taking one quarter of your savings free of tax, and effectively increase your future pension tax bill by one third.”

 “People are still grappling with the substantial pension reforms of the last couple of years. There is a serious risk that further change will put them off from saving for retirement altogether. Trust is another big issue. If Pensions ISAs are made to look like traditional ISAs, then won’t everyone choose the one they can trust - and that is not the Pensions ISA.”