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APFA urges Treasury to leave pensions tax relief alone

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The Association of Professional Financial Advisers (APFA) has called for the UK Treasury to focus on increasing auto-enrolment savings rates and not fiddling with the tax relief for pensions.

APFA’s paper, produced in response to the Treasury’s Strengthening the incentive to save: a consultation on pensions tax relief, supports the government goal of increasing pension saving, but says this would be better achieved by raising auto-enrolment default rates. Reversing the system of tax relief to a “taxed; exempt; exempt” model would endanger the future of pension savings.
 
Chris Hannant (pictured), Director General of APFA, says: “I am concerned that the suggestion that people would pay tax now and having to trust a future government to honour a promise it didn’t make would destroy pension saving as we know. Who would trust a future government not to fiddle with pensions?
 
“Messing around with tax incentives at a time of such huge change for the whole pension sector seems like madness. Auto enrolment is going to provide a huge challenge in capacity as the volume of firms staging peaks next year. It took the Pensions Commission several years to conclude that auto enrolment would be the best way to get people to save. Building on this by increasing rates will do more to make people provide for the future than tinkering with the tax system.”

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