Employer contributions to personal pensions have grown faster than payments made to occupational schemes over the last five years, according to figures from Her Majesty's Revenue and Customs (HMRC).
The figures show tax relief on employer payments to defined benefit (DB) schemes doubled in the last five years from £6.7bn to £13.3bn.
However, over the same period tax relief on employer contributions to personal pensions grew by 130% from to £1.63bn. The average rate of tax relief on contributions has now reached 29%, according to the Revenue.
Commenting on the findings, Standard Life says total contributions to personal pensions have reached almost £12bn a year after adding in the £1.8bn tax relief received by employees in 2006 to 2007.
Andrew Tully, marketing technical manager at Standard Life, says: “Gradually people are moving away from DB schemes and occupational schemes towards group SIPPs. This is largely because of tax changes at A-Day. SIPPs are more flexible and have less regulation, they don’t need trustees and are easier for small employers."
“Flexible contracts such as group self-invested personal pension will become the engine of further strong growth in this market this year and next.”
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