Reports and Briefing Notes
Comparison of pension outcomes under EET and TEE tax treatment
In the Budget of 8 July 2015, the Chancellor, George Osborne, announced a consultation into the use of tax relief to “strengthen the incentive to save” for retirement. This report forms part of the PPI's response to the Treasury's consultation and is based on new analysis undertaken for the ABI.
This report sets out the impact that the potential policy reforms might have on the level of money that people of different ages and in different tax positions could accrue by retirement and their resulting post-tax pension wealth. It also considers the impact of potential reforms on the cost of tax relief to the Exchequer.
Chapter one sets out analysis of a £1,000 contribution made by individuals under the ABI’s set of potential reform options. Using a single £1,000 contribution for individuals in different circumstances serves to set a level playing field for comparison
Chapter two considers the whole working life impact of the various tax regimes on individuals and the extent to which their outcomes are affected by working patterns.
Chapter three sets out the first year static impact on the cost to the Exchequer of a number of the reform options. It goes on to consider how the distribution of tax relief by salary level and by age may change under a flat rate pension tax relief system.
Chapter four considers making an adjustment to the system of pension tax free allowances, the Annual Allowance and the Lifetime Allowance. The reform option considered is that DC schemes would be subject to the Annual Allowance but not the Lifetime Allowance, and that DB schemes would be subject to the Lifetime Allowance but not the Annual Allowance.
To download the report, please click here.
To download the the executive summary, please click here.
To download the response to the Treasury Consultation 'strengthening the incentive to save', please click here.