ICAEW: double new pensions annual allowance in 2011

Carry back/forward would help to make the limits more flexible. In the case of small to medium sized companies, contributions are often defined by cashflow and therefore even if the average annual contribution is say £30,000, cash flow may not allow any contributions one year and therefore necessitate 'catch up' payments subsequently.

Not to mention those who simple prioritise their business over retirement planning and don't contribute until 5 years before retirement!

What about Pension Simplification?

Going back to carry back/carry forward is another aspect that would defeat this.

One simple annual allowance - use it or lose it!

Gary not all self employed or business owners can 'use it'. This was why the annual allowance was brought in to compensate for the loss of the carry back and carry forward rules.

It would be interesting to find out how much 'tax' revenue was lost as a result of simplfication.

I agree Sean, there must be some inbuilt flexibility for self employed persons and business owners.

The problem with the simplification idea is that people's personal circumstances as well as those of their business/employer are so diverse that a 'simple' solution often causes more problems and inequalities than it solves. Just look at the amount of amount of transitional legislation around A Day. As well as lost tax revenue how much did it cost to eneact for all involved?

Nice idea (and vote winner/soundbite!) but any sweeping changes are likely to discourage pension saving rather than improve the situation. Hopefully in this case the proposals for increased flexibility will be enacted in a meaningful way.

I wonder what all the consultation that took place during "simplication process" and the reasoing behind the rules that were introduced in 2006 are being disregarded.

Whilst pensions simplication it wasn't, it did allow those business people small and large businesses the opportunity to delay funding, which many have now chosen to do. As Anon1 has pointed out some use their last five years to draw money from their business through choice or indeed where they have no choice leave it to the sale of the business. It is quite unfair for the self-employed who having struggled to build a business, then having had the committment of a family with additional funding of the furhter education of their offspring to get to a point where they can put aside larger sums of money for their retirement to find this is no-longer possible, and will resort to thinking their business is their pension. Which it is not! They will not be treated as all the rest of the population who if lucky enough to be in a pension scheme through their employer will have received tax relief on savings to that scheme, in figures over their lifetime well exceeding the annual allowance being proposed.

The alternative is a percentage of income I suppose, but isn't that where we started? 17.5% etc etc etc.....

£50,000 annual allowance and opportunity to go back one year to sweep up unused contributions should be easy enough to operate. I agree with doubling the allowance in the first year to ease the transition. However, this temporary increase should not be available in future years to carry forward.

While we're at it, why not increase the tax free cash allowance to 50%, with the proviso that the extra 25% can only be used to pay directly to a care provider for long term care.

David your point of allowing for Long Term Care is a good one which I have made on this forum before.

I however feel that the whole fund should be available for LTC.

As the payments will be income to a Residential Home or providers of care then HMRC will have their due take. If the fund was taxed on withdrawal and the carer were to pay tax too this would seem a little over the top, but then we do pay for services out of our taxed income!

If the residual fund is then allowed to be transferred only to a PP as an asset of the estate and taxed accordingly I do not see where HMRC are missing out here. The money going in to a further PP will again restart the cycle, and perhaps we may see long term savings in the UK be more popular again.

Tim I see where you're going with this. If pension were in payment by way of drawdown, presumably the existing tax rules would need to change allowing the residual fund to be used for LTC.

Why are the circumstances for self employed different for professional employed people who start work on modest salaries and are not able to save much, but through talent and hard work and after a period of time have a flourishing career and are able to contribute lager amounts to their pension scheme?

Meanwhile the self employed do have considerable flexibility in the tax system that the employed do not.

Suggest that there is no need to differentiate with pensions - unfortunately given current economic conditions (where we are paying for the massive tax concessions given to previous generations) we are all restricted - I am surprised that the Government has made no attempt to try and address this issue by for example charging capital gains tax on all property gains with no private residence relief. (Could of course off set any stamp duty paid against the gain).