UK Pensions Chief Urges Tax Reform

by Robert Lee, Tax-News.com, London

14 May 2002

The Chairman of the National Association of Pension Funds (NAPF), Peter Thompson has renewed calls for a higher degree of equality with regards to the tax treatment of pension contributions in the United Kingdom.

Speaking at the start of the NAPF annual conference, Mr Thompson observed that: 'The Chancellor seems to think we should all have a long, healthy, and poor retirement.'

He called for higher rate tax relief on pensions savings to be accorded to basic rate taxpayers, arguing that without radical reform of the country's unfair and complicated pensions tax system, an entire generation of future pensioners will be condemned to poverty in retirement.

The model suggested by Mr Thompson at the NAPF conference would involve 22% tax relief on income paid into a pension scheme, supplemented by an 18% credit, which would effectively accord low and middle income workers the same level of relief as higher rate taxpayers.

However, the pensions body has been calling for reform for some time now, seemingly to little effect. In a statement released before the Chancellor's April 17 Budget, Peter Thompson warned that without simplification of the pensions tax regime and a real commitment towards prioritising long over short-term saving: 'We believe that the present decline in the overall level of pension saving will continue'.

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