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Pension tax change under attack

Alistair Darling's plan to cut tax relief on pensions has been met with criticism by several leading business figures, with claims that the measure will discourage pension savings.

The measure - announced last month in the Budget - will reduce tax relief on income paid into pensions only for those earning more than £150,000.

Despite this only affecting those in the higher bracket of earnings, there are concerns that this still sends out the wrong message over pensions.

"Tax relief on contributions was a way of saying to everyone - and I mean everyone, irrespective of earnings - that saving for your pensions is a good thing and we will encourage it. Now that contract has been broken and if it can be broken for one segment of savers, it can be broken for others," said Trevor Matthews, chief executive of Friends Provident.

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Post Date: May 14th, 2009