UK Pension Savers Miss Out On GBP720m In Tax Relief

by Jason Gorringe, Tax-News.com, London

17 June 2009

The UK’s retirement savers are missing out on an extra GBP720m (USD1.1bn) tax relief by not making additional pension contributions, it has been claimed.

Research from Unbiased.co.uk, the professional advice website, has revealed that working people in company pension schemes are missing out on huge sums by neglecting to save in tax-efficient ways.

High-rate taxpayers that are members of their employers’ occupational pension scheme will miss out on an extra GBP720m (USD1.1bn) tax relief this year by failing to make Additional Voluntary Contributions (AVCs).

AVCs run alongside employers’ pension schemes and allow employees to pay extra into their pension which should result in a larger pension pot at retirement. AVCs benefit from the same tax relief as contributions paid into the main pension scheme, so it makes sense to benefit from this tax-efficient way of saving for retirement.

David Elms, Chief Executive of Unbiased.co.uk explained:

“Failing to save for retirement has become an increasing problem for the UK population. The onset of the credit crunch has further compounded this problem as the value of people’s pension funds is decreasing and they are also finding their money doesn’t go as far as it used to."

"A discussion with an IFA is a good way to ensure you are planning effectively for your retirement and get your financial planning in order."

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