According to the title of the government’s last review into pension tax relief, the primary purpose of this valuable bonus is to strengthen the incentive to save. Fiona Tait assesses whether the rewards of saving into a pension are fit for purpose...
Most people do not understand how pension tax relief works, and there are 10 million people saving as the result of automatic enrolment anyway. I am, however, fairly sure of two things: People do understand the concept of ‘free money' and the idea of it being a reward for ‘good' behaviour People may not understand exactly what they are getting but they will care if it is taken away from them The government is perfectly right to consider the sustainability of the current system, and whether it has the effect intended. However, they should think carefully about some key question...
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