Pension tax relief changes 'present risks'

The changes to pension tax relief have been welcomed by one sector organisation but it has warned that current proposals risk unfairly penalising those who are promoted or made redundant.

According to the National Association of Pension Funds (NAPF), government plans to restrict pensions tax relief for high earners are "sound in principle" but need some urgent fine-tuning.

The organisation explained that the inclusion of 'past service' into the planned tax workings will hit those with final salary pensions who have spent a long time with their company, and also affect those who have to retire early because of illness.

Joanne Segars, NAPF chief executive, commented: "The planned regime has thrown up a series of issues that must now be resolved. If they are not, many people risk getting caught up in a bewildering and expensive set of rules that were aimed at those earning much more."

Meanwhile, the Pension Protection Fund has outlined its long-term funding and risk reduction strategy, includes its aims to be financially self-sufficient by 2030.

Posted by James Harrison