High net worth (HNW) advisers have branded measures in today's Budget to restrict tax relief on pension contributions for top earners as "yet another nail in the coffin" for savers.
The Chancellor Alistair Darling said, from April 2011, pension tax relief for people earning over £150,000 will be restricted to ensure it is tapered to the same 20% the majority of others receive.
Savers who do not earn in excess of £150,000 are unaffected, as are those who continue with their regular pattern of contributions.
Frank Cochran, founder of Celebrity Financial Planning, says this latest measure only adds to the "appalling" decision to remove Advanced Corporation Tax (ACT) relief.
"This is yet another Government nail in the coffins of those trying to make a successful living," he says. "They have already taken away ACT relief, which knocked a huge hole in people's pension pots."
Cochran adds high earners are also more likely to change their contributions as their incomes can often be "less stable".
Meanwhile, Andrew Fisher, chief executive at Towry Law, describes the measure as a "retrograde" step, hinting it stands against the Government's stance of encouraging people to save for retirement.
"The world of pension savings has just become increasingly complicated for higher earners," he says. "They should seek professional advice as soon as possible."
But Dr Markas Gilmartin, managing financial consultant at AWD Chase De Vere's new venture for the "über -wealthy", Advanced Wealth Management, says the measure in today's Budget may have been an intentional move by the Government to increase investment in other areas of the market.
"There's no doubt this will stop people contributing so much to their pension," he says. "But I think people will start looking at other vehicles. A lot more money will flow into private equity now, and that is what the Government wants."
Meanwhile, providers say the measure "rides a coach and horses" through pensions simplification.
"Implementing tiered tax changes will impose additional administrative and cost implications upon providers already battling to keep costs down in the current challenging market," Axa Life chief executive Paul Evans says.
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