Age Related Pension Tax Relief

More Tax Relief Earlier You Start Pension.  Age related tax relief.

It is common knowledge that the Government are looking at sweeping reforms to pension tax relief to encourage us all to save.  This was postponed earlier this year following Brexit but it looks like the Government are still pushing ahead.

In the latest ‘leak’, covered online and in some national newspapers, the Government is clearly seeking indirect feedback as to an idea that for every year you are below the age of 100, you will receive a tax relief top of £1 for each pension contribution you make.  For example, if you are 25 years old and you make a £100 pension contribution, the Government would add a £75 bonus.

Looking at bands, this would mean

£100 invested for a new born baby (yes, they can have a pension), a £100 government bonus would be added.

• A 20 year old investing £100 would get a £80 bonus.
• A 30 year old investing £100 would get a £70 bonus.
• A 40 year old investing £100 would get a £60 bonus.
• A 50 year old investing £100 would get a £50 bonus.
• A 60 year old investing £100 would get a £40 bonus.
• A 70 year old investing £100 would get a £30 bonus.

Comment

The size of the bonus is simply too high.  The numbers do not add up.  We can only suggest that the government would then cap the amount each year you can save, for example reducing the annual allowance from £40,000 to £20,000.  Or even doing it on a sliding scale too, depending upon your age.