Pension tax relief: What the industry said

Reaction to changes to pension tax relief rules has been fast and furious. We've picked the best...

• Annual allowance for pension contributions is £50,000 (from £255,00)
• Lifetime allowance (LTA) on contributions is £1.5m (from £1.8m)
• Value of the increase in DB pensions changes from 10 times to 16 times

Advisers:

Viv King, director of VKFPA: "In the climate of redundancies we have now, people accepting redundancy may not be able to put large sums from their redundancy payout into their pension to take advantage of the tax benefits; they should beware!"

David Stone, partner at Mansion House Capital: "The new annual allowance is fairer. When the £255,000 annual allowance came out in 2006 I literally was literally flooded with cheques from people that earned £1m p.a. in the City to maximise the taxpayer funded relief of £90,000 per person per year!"

Anna Sofat, director of Addidi Wealth says: "Both limits are reasonable, although clients will need to fine tune their plans. I only hope that MPs' pension schemes come under the remit of these rules; they were exempt in 2006."

Providers:

John Moret, marketing director, Suffolk Life: "Although DB is in decline, these rules seem to have been designed around DB; there should be a separate regime for DB schemes.

"Also, advisers need to be aware that pension input periods (PIPs) starting from today are subject to next year's tax rules, not the current year's rules, even though the PIP straddles the 6th April next year."

Maggie Craig, director general of the ABI: "This plan keeps the important principle of pension tax relief at the marginal rate of tax paid.

"This will help keep those senior decision makers, responsible for staff pension schemes, engaged and supportive of pension saving."

Adrian Boulding, pensions strategy director at Legal & General: "The new allowance means high earners may need to consider ISAs and maximum investment plans (MIPs) for retirement planning, rather than paying the full rate of tax on contributions above the annual allowance."

Kate Smith, pensions development manager at AEGON: "As we fully expect to enter a more inflationary period in the next few years, it is important to index the allowances, particularly the annual allowance.

"Without indexation, the value of the annual allowance will gradually be eroded, increasing the risk of more people facing a tax charge. This in turn erodes the value of pension saving."

Ros Altmann, director-general of Saga: "The multiple of annual additional pension accrual which will be deemed to accrue will be 16 times the amount of extra pension.

"Those earning £50,000 a year could suddenly be landed with an unexpected tax charge as a result of promotion or pay rise.

"With a final salary scheme, salary increases will apply to all past pension entitlements; is this the Government's way of craftily trying to move pension schemes away from final salary towards career average?"

Roger Breeden, Principal at Mercer on Employer Financed Retirement Benefit Schemes (EFRBS): "We have never understood why HMRC would leave the back door open as an easy escape route from these new restrictions.

"Unfortunately, some organisations will have spent significant amounts on establishing these plans and will now be looking to unwind their positions.

"We believe that funded EFRBs are dead; those that are unfunded may well remain but the volume will be low."