Where next?
Regrettably, politicians will always view pensions as an area where the tax received by the Treasury can be increased without necessarily hitting an individual’s pocket today. For more than 20 years, stories have been circulating about the abolition of a tax-free lump sum, and the Labour party has recently been quoted as saying higher-rate tax relief for individuals should be abolished.
While the backlash from a withdrawal of the lump sum would be politically crippling, the limiting of contribution relief to basic-rate tax would probably create less of a stir. It is interesting to note, however, that company contributions would still be subject to corporation tax relief even though personal contribution tax relief might be limited. This would give a clear advantage to saving through a SSAS rather than a Sipp, where the majority of contributions are personal.
But there is no certainty in constant change. With Budget day rapidly approaching, it is all savers and providers can do to hope for that long-sought period of stability.
Ian Hammond is managing director at Rowanmoor Group
