Paula Diggle, an Inland Revenue Civil Servant spoke recently about tax relief on pensions and the comments were not favourable. According to Miss Diggle, only around 6% of people receive the 40% relief on their contributions. She said that the additional relief of 18% for higher rate taxpayers only benefits the wealthy and is unsustainable.
Basic rate, lower rate and non taxpayers receive tax relief at 22%. As the subject of pension contribution tax relief seems to regularly appear in the news, the position for people investing in pensions becomes uncertain. Any speculation surrounding removal of the existing benefits of pensions can only worsen the ever-widening savings gap. Something needs to be done to inspire confidence so consumers will see pensions as good value and something worth investing in.