More upheaval for pensions tax relief? Dec 11

Although the Chancellor George Osborne made no mention of it in his Autumn Statement last month, rumours are still rife that the Government is planning to cut tax relief on pension contributions in next Spring's Budget.

The focus continues to be on the level of higher-rate tax relief enjoyed by a relatively small number of pension savers. However, Money Marketing also reports that the Treasury is considering a cap on the amount of tax-free cash taken at pension commencement[1].

Whilst the Treasury have denied the reports, reiterating that the Government is committed to providing incentives for people to save for their retirement, this is not the first time such rumours have been heard - Gordon Brown was intent on the very same during his time in office. And there have already been cuts - the annual allowance was reduced to £50,000 in April this year - so there may be something in the rumours.

What should you do?

Nothing is certain. The Budget might well come and go without any changes. However, if you're considering significant single contributions to your pension in 2012, it may be wise to bring them forward into the current tax year, if you can afford to do so....always ensuring you don't breach your annual allowance plus any allowance brought forward from the previous three years. If in doubt, speak to your Aspira financial adviser.