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What do the Conservatives have planned for pensions?

 

Changes to auto-enrolment thresholds, tax relief and the possibility of scrapping the tapered annual allowance are all expected following last month's general election, according to Aegon’s pension director Steven Cameron.

Appearing on the FTAdviser Podcast Mr Cameron said he expected the March Budget to include some changes to tax relief, with the big question being whether any of these will be radical.

He was also pretty certain that a long-term solution to the NHS pension issue will feature but said scrapping the taper altogether should not be disregarded by the government.

The idea of moving to a flat rate for tax relief was also suggested but Mr Cameron said the government would need to ensure that this level was favourable for all. 

Mr Cameron said: “I do favour considering moving to a flat rate for pensions tax relief but what I don’t want is for it to be rushed.

“The reason for that is that when George Osborne looked at this back in 2015 we as an industry spent a lot of time analysing all of the issues and there were many, some of which remain unresolved.

“So if the Conservatives are looking at this option we must take lessons from the past and learn where the problem areas lie.”

He appeared alongside chartered financial planner John Hill, who was less enthusiastic about introducing a flat rate for tax relief.

Mr Hill said: “There are some challenges with flat rate tax relief for example, if you get a flat rate of 25 or 30 per cent then although this encourages lower earners to contribute to a pension it will put off higher earners who could become disillusioned by pensions which is something we are already seeing as a result of the tapered annual allowance.”

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