The Liberal Democrats are considering proposals to restrict pension tax relief to the basic rate, in a shake-up aimed at creating greater equality in the pensions system.
They have said that the estimated £4 billion savings would be used to lessen the tax burden for low to middle earners. The party are also looking at raising the threshold for higher rate tax to £50,000, and cutting basic rate tax from 22% to 20%.
Our view
Given that this country needs to actively encourage people to save, we see this suggestion as a strange move as across the spectrum both basic rate tax payers and higher rate tax payers would see tax relief on pension contributions reduced.
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