The HRMC has revealed that the cost of pension tax relief in the UK last year amounted to the astronomical sum of £51.6 billion.
This is due to the tax relief that UK citizens receive on contributions to their pensions (up to the annual allowance limit) and the NI relief that employers also receive on their contributions to their employee’s pensions.
Whilst this tax relief obviously comes at a great cost to the government, it is also a clear indicator that their plan to get more people investing in their pensions is working, meaning that more people are considering their future and retirement. Hopefully, this should also reduce the pressure on the government to support those who do not have sufficient provisions to make ends meet when they are forced to stop working due to age.
There has been speculation about whether the government will be reducing the tax relief on pensions available in order to decrease the amount of money they lose to the incentive program each year. However, as a result, people are likely to invest less in their pensions. The government will need to decide what they want to prioritize: a nation prepared for retirement, or a smaller bill on pension tax relief.
How Can Blacktower help you prepare for Retirement?
At Blacktower, we manage the pre- and post-retirement planning for clients across the globe, with the goal of helping to ensure that their finances are optimised towards helping them reach their retirement objectives. This means that we provide ongoing advice to our clients on all aspects of their wealth management including inheritance tax planning, the management of pensions, insurance policies, and other suitable protection and investment products. What a person needs will vary depending on their circumstances, which is why we take the time to get to know you, and your goals.
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This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
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Since the Pensions Freedom Act came into force in the UK, in April 2015, there has been a huge outflow of money from defined benefit pension schemes and personal pensions in the UK. Many people have taken advantage of the new flexibilities by having control of their own pension pots.