Tax  

Doctors join pension tax relief debate

Doctors were leaving the scheme mainly due to tax charge concerns if they made excess contributions or if their pension assets became too large, the firm added.

According to Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, the reductions in the lifetime allowance in recent years - from £1.8m in 2011/12 to the current £1.03m – have made the annual allowance "a bit out of place now".

He said: "It penalises those who are perhaps in the later stages of their working careers, when they can afford to save the most as they are in more senior roles, their mortgages have been paid off, or children have flown the nests.

"In addition to this, for higher earners, their annual allowance is tapered so they can only save as little as £10,000 a year."

Mr Chan noted savers should, however, be careful of what they wish for.

He said: "There is no free lunch in life. If the annual allowance is ever increased or abolished completely, then we might see a drastic change to the tax relief system, such as flat rate relief that has long been tooted. There will be winners and losers if this did happen."

maria.espadinha@ft.com