On Tuesday, the House of Lords made very clear their objection to the Chancellors decision to attack 40% pension tax relief for those earning £150,000 a year. Their key criticism was that the changes were too complicated, retrospective and damaging to the ethos behind pension planning. As many of our clients will know, I am not a fan of pensions – their saving grace is the tax relief achieved on the contributions, which is invariably worth the pain of locking money up in a pension (albeit with much improved flexibility and access since “A-day”).

The number of people and amounts of money involved are relatively insignificant when compared to other aspects of public finance. In practice, there are already existing restrictions on pension payments:

1. Payment cannot exceed of 100% of earnings (capped to an absolute maximum of £245,000 in 2009/10
2. The total value in a pension cannot exceed the lifetime allowance of £1.75m in 2009/10

So in reality most people will not contribute up to £245,000 towards a pension, even if they could it would use up 14% of the lifetime allowance in a single year.

Of course, a pension is an investment – so any payments into one will invariably be buying shares, which helps to grow businesses and of course stimulate/repair many ailing companies. The implications of messing around with a fairly clear system appear to have been poorly thought through.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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