Michael Johnson of the CPS says the current tax relief framework should be overhauled.
To read the full article, visit the FT Adviser website.
“Ahead of the chancellor George Osborne’s Autumn Statement next week, Mr Johnson, a research fellow and pensions analyst for think-tank the Centre for Policy Studies, said the current tax relief framework was aimed at the wealthy and did little to encourage a savings culture among younger workers.
His 16-page report; Costly and Ineffective – Why Pension Tax Reliefs Should be Reformed, was published by the CPS last week, and put forward nine proposals to change the current tax relief system.
These include:
• Combining yearly contributions for Isas and tax relieved pensions at between £30,000 and £40,000.
• Abolishing higher rate tax relief, with £7bn saving being partly used to reinstate the 10p tax rebate on pension asset dividends and interest income.
• Replacing income tax relief with a single flat rate of between 25-30 per cent – and incentivising low earners to save for retirement.
Mr Johnson said the current return to the treasury on its co-investment with people saving for retirement was 2.9 per cent, or 1 per cent less than the amount it paid out in tax relief, amounting to £7bn a year.”
To read the full article, visit the FT Adviser website.
Date Added: Friday 30th November 2012
