Monday, 29 September 2014

Pensions turned on their heads

The end of the 55% tax charge will be a significant gain for some.
But the question Mr Osborne will have to answer is whether he is creating a way for better-off savers to escape tax.
They will have an incentive to use money stored in bank accounts and investments before dipping into the pension pot.
The reason? The pension will become a way of protecting up to £1.25m from some or all tax after death.
Those on lower incomes, who can't save much, and need the money during retirement, have not been in danger of paying the 55% and are unlikely to benefit from its removal.
Some experts, including the well known pension consultant John Ralfe, say the Osborne reforms turn pension saving on its head.
The point used to be to spread your income over your lifetime.
In future, pensions could become a method of preserving savings beyond the grave.

No comments:

Post a Comment