Speaking to the Financial Times, Altmann, who took on her ministerial role following the Conservative’s victory in May’s UK General Election, said the tax relief on pension contributions for people earning more than £150,000 was “bound to be regressive”.
“[A flat rate of tax relief] is one of the things we will consider in the consultation,” she said. “[The review] is genuinely open.”
The changes will come as part of a three month review into pensions which is expected to conclude in October, just in time for Osborne’s Autumn Statement.
In July’s Summer Budget, chancellor George Osborne announced that the annual allowance will reduce by 50p for every £1 of income between £150,000 and £210,000.
Liz Field, chief executive of the Wealth Management Association, the representative body for the UK investment community, said further cutting pensions tax relief would send an anti-saving message, whether it applies to low or high earners.
“These changes come after the chancellor’s ‘savings revolution’ in his last Budget just four months ago, and follow his widely publicised and promoted new pensions freedoms,” she said. “Constant shifts in government treatment of these issues reduce trust in government initiatives and increase the public cynicism with which policy announcements are met.”
She said the move would “undermine” the impact of savings and investment objectives and encourage people to spend their pension money.
“We need a long term government commitment to developing a full-scale investment and savings culture in the UK.”
Surprising
Les Cameron, head of the technical team at Prudential UK, said it would be “surprising” if any tax relief reforms were more generous to higher and additional rate taxpayers.
“For those attracted by the tax breaks they may be best served by not delaying payments and making the maximum contributions they can under the current rules,” he added.
