Whether the latest proposed changes to pension tax relief will actually encourage saving has led to varied opinions among numerous advisers and providers.
With details being recently released, the policy being considered by the Treasury would mean different levels of top-up being offered by the Government on an age-related basis.
Based on the original idea of Hargreaves Lansdown, the Government would offer £1 minus the individual’s age, for every £1 they would pay into the plan, should the proposals be implemented. Therefore, for every £100 a 25-year-old paid in, they would receive a £75 bonus, whereas someone aged 60 would receive a £40 top-up, despite saving the identical sum.
Cutting the annual allowance from £40,000 to £20,000 has also been suggested by the Treasury, as a means to minimise the costs of the fresh proposals.