The Government is to relax its pension anti-forestalling rules, raising its contribution limit to £30,000.
Originally, those earning more than £150,000 would be limited to a £20,000 tax free pension contribution unless they could prove they regularly committed a higher amount.
Stephen Timms, financial secretary to the Treasury, tabled the amendment to the Finance Bill 2009 to raise the contribution limit on Friday to £30,000 and to implement a different way of calculating contributions.
The upper limit for contributions will now be the smaller of the new £30,000 limit or the average of an individual’s last three years’ of contributions for those who do not make 'regular' contributions.
The ABI says: "While not a perfect solution to the annual payment issue this is progress and to be welcomed. We will continue to press for further relief for unfair cases to be dealt with through regulations, and we maintain that the changes in pensions tax announced in the Budget were a retrograde and misguided step to take.”
The National Association of Pension Funds (NAPF), is also concerned about the Government’s treatment of pensions, though it has thrown its support behind the amendments.
"We are pleased that the Government has addressed some of our concerns regarding the anti-forestalling regime,” says Nigel Peaple, NAPF director of policy.
“Adopting a more flexible approach to existing contribution agreements and to ‘irregular’ contributions will make a real difference to some companies and individuals. However, the NAPF remains deeply concerned about the Government's plans to change tax relief for pensions. We need Ministers to listen on this too."
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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