So another plan to alter pension tax relief is being hatched. I am sure those behind it think it is a jolly good one.
Let us offer more tax relief to younger people then taper it away as they get older. That will surely provide a greater incentive to the young to save more.
Young people do not save more into their pensions because they have other priorities, both social and financial. These include paying off a student loan, attempting to keep voracious banks with their incessant charging at bay, paying the rent, saving a deposit for a home, furnishing it, juggling credit card debts, keeping up an active social life and, of course, going on holiday.
It does not matter how much tax relief is on offer – a pension will always come below these essentials to maintaining a 20-something lifestyle.
And so it should. As a financial nerd, even in my 20s I appreciated the importance of saving into a pension and that an earlier start should make for a much larger fund. But my mortgage and a host of other bills took priority. So I saved, but not a lot.
And, like many, it was only once I was in my 40s and felt more financially established that I began to pile cash into my pension.
There is no doubt that pension tax relief is ripe for reform. But basing it on age would once again play into the hands of those who are already better off. The people likely to gain most would be those from the wealthiest backgrounds whose parents had paid their university fees and given them a hand with housing costs.
Basing relief on age would also be unnecessarily complex for individuals and the pensions industry.
Surely the simplest option is also the best. Give a standard rate of top up to all. Put an annual cap on contributions and, if necessary and workable, put a lifetime cap on them too – but not on fund value because this punishes good investment.
People should not receive more tax relief because they earn more, but neither should they get less.
Most important – and this is the biggest problem with the age-based idea – people should not be disadvantaged because their career gets off to a slow start and they happen to be in a better position to save later in life.
PPI issues keep festering
My initial reaction was straight out of the Victor Meldrew phrasebook: “I do not believe it!” The headline to provoke it appeared in the Daily Mail telling of how banks were “snatching back PPI payouts”.
One bank asked a couple to repay £15,000 in compensation – it backed down after Money Mail intervened. Another took more than £1,500 from a customer’s credit card only to be told by the Financial Ombudsman that it must return the money plus £300 compensation.