Eddie Saville gives an update on HCSA’s role in an alliance fighting for your interests on retirement
HCSA continues to lobby the government over changes to pensions taxation that would have a big impact for many of our members – and which we and other professional associations believe would encourage many to reduce savings or even pull out of pensions altogether.
We have joined forces with 11 other professional bodies and trade unions, representing over 230,000 professionals including doctors, dentists, airline pilots, head teachers, senior civil servants and chief police officers, to highlight concerns over the proposals.
The plans as set out by the government in its green paper Strengthening the Incentive to Save: A Consultation on Pensions Tax Relief include the reduction of higher rate tax relief or the complete removal of “up-front” tax relief.
If implemented, they would create a tax-disadvantageous pensions system for many professional people. A reduction in those saving into professional and executive pensions could be a disaster for retirement savings in the UK.
In December a delegation of professional association and trade union leaders including myself met Treasury Minister David Gauke to discuss the issue – one that is bound to affect members in this year’s budget.
In January a joint letter was dispatched to the minister seeking further dialogue in the latest move aimed at protecting our members’ interests.
Reduced annual and life-time allowances for pension savings have already raised an additional £6 billion annually for the Exchequer from higher earners. Changes from April that will see the annual allowance taper down by £1 for every £2 earned above £150,000, including pension contributions, will introduce an effective tax rate of 67.5 per cent for additional rate taxpayers.
As such this represents a fair and proportionate contribution to public finances. We believe that the main immediate policy aim should be to restore stability and rebuild confidence in the existing pensions system rather than introducing any further significant changes to tax relief.
Given the magnitude and complexity of these issues – and the potential for unintended and damaging consequences – we would support the establishment of an inclusive retirement savings commission to advise the Treasury and DWP on protecting and improving pensions saving.
The best way to maintain and improve good pension schemes is to ensure they cover all categories of staff, from apprentices and trainees through to professional employees and senior executives.