Hargreaves calls for £50k cap on annual pension contributions

Hargreaves Lansdown has said the pensions industry ‘unanimously’ supports a £50,000 cap on annual contributions as a more appropriate way for the Treasury to restrict relief.

Next April tax relief on pension contributions will taper to 20% for those earning £180,000 but the move has been opposed by leading pensions figures.

Before the last Budget industry bodies including, Tisa and the Association of British Insurers, lobbied to replace the proposals with a reduction of the annual allowance from £245,000 to £50,000.

‘We conducted an informal survey of the pensions industry, including trade bodies, pensions lawyers, actuaries, fund managers and IFAs,’ said Tom McPhail (pictured), Hargreaves Lansdown head of pensions research.

‘We asked them which was the more appropriate way to restrict the tax relief of high earners; through Labour’s pension tax, or through a cap on pension contributions. They unanimously opted for the contribution cap.’

Hargreaves used calculations by Legal & General pensions strategy director Adrian Boulding which show the £50,000 cap will raise the same the same amount as the taper.

‘The beast is dead but the tentacles of the former Labour government are still reaching for the private pension system in the form of a monstrously complicated pension tax. Capping pension contributions at £50,000 is a much simpler way to achieve the same goal that has the support of the whole pensions industry,’ said McPhail.