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There are many flaws in the Budget proposals on high earners, but HMRC has now clarified points regarding loss of pension tax relief on switching pension scheme, which are plainly unfair and restrictive.

1. Picture a high earner in a high charging personal pension. He cannot now switch to a lower charging scheme even at the same contribution level, as higher rate tax relief would be restricted to the first £20,000.

2. If an employer changes their GPP, only standard contributions are protected where they are offered to a "group" of people. For example, if everyone gets 5 per cent and is required to invest 5 per cent, but a high earner pays in 20 per cent, then only his 5 plus 5 per cent is protected. In other words, additional investments are excluded, even if there is no break nor increase in contribution level.

So, again, a high earner would lose out if their employer simply wants to change to a better pension scheme. As the high earner is likely to be influential in such a decision to change, it could trap all employees in an inferior pension scheme.

Fairness seems to have gone out of the window in a desperate spiteful rush to hit "toffs".

If you are unhappy with such proposals, the HMRC pensions helpline is encouraging advisers to write in to help shape the actual legislation.

Mark Osland

Chartered Financial Planner

Formula Ltd

South Croydon