The long-term attractiveness of pensions for very high earners was put in further doubt as a result of the changes within the pre-budget report in December. Restricting tax relief to 20% on personal contributions and taxing these people on pension payments made by their employer, from April 2011 onwards, removes the key attraction of locking money away until retirement.
However, there are some short-term opportunities, even for high earners, to pay in substantial pension contributions in advance of 2011 and receive higher rate relief. Further clarification from the Government was forthcoming a few weeks ago, which allows high earners to continue regular payments to a new pension arrangement without facing a special annual allowance tax charge. Under the original anti-forestalling rules, regular pension funding for high earners that was in place before the budget on 22 April 2009 (or pre-budget on 9 December 2009, for those in the £130,000 to £149,999 in...
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