Pension saving curbs confirmed by Treasury

The Treasury has this week confirmed limits on pension saving that will lower the annual allowance, which is the maximum amount payable into pensions schemes in any given year.

The current annual allowance of £255,000 will be cut to between £30,000 and £45,000, but with the proviso that the new, lower limit will have full tax relief, whereas the higher pensions saving limit had only limited tax relief.

The measures will please those in the pensions industry who have been calling for a simplification of the rules governing pension saving, private pensions schemes and company pensions schemes. These have even included voices from within the Revenue Commissioners (HMRC), who had admitted that keeping staff on top of the constantly evolving tax regulations on pensions schemes was increasingly difficult.

However, the Treasury’s proposals will affect more pension savers than the proposals left in place by the previous Labour government, which had been aimed at those earning over £130,000 a year.

The confirmed proposals on pension saving and pensions schemes have already been applauded by a spokesperson for the National Association of Pension Funds (NAPF) as a simpler approach that would have indirect benefits for pension saving options of all those in company pension schemes.

By encouraging higher earners to remain in company pension schemes, the new rules would make those company pension schemes more stable and secure for all employees, said NAPF.