Final salary pensions (also known as defined contribution schemes) appear to be next in line for a government raid. It is proposed that tax relief will be limited to 20pc rather than the current 40pc. There is also a proposed reduction of 25% in the lifetime limit for defined contribution schemes. The result could be to push individuals in to the penal tax rate of 55%.
Last week savers with the most generous types of work pension – known as “final salary” or “defined benefit” – were shocked to learn that the Government is gearing up for a major raid on their pensions. Telegraph money disclosed Treasury plans to limit the tax reliefs, or Government top-ups, available to future contributions into such schemes. The blow would fall heavily on the upper ranks of the public sector, including MPs, civil servants, doctors and other NHS workers, and senior teachers, among others.