Pension Consultation Papers don’t normally spark the ears of the general public, this tends to be reserved for the pension ‘geeks’ amongst us, a category of which I am absolutely convinced applies to yours truly!!

However, the current pension consultation is interesting to all, really it is, bear with me! Initially planned to be announced in October, delayed until the Autumn Statement, and now on the agenda for the Budget in 7 weeks time (on 16^th March) this consultation is specifically looking at the tax relief applicable to future pension contributions.

The Chancellor appears to be minded to introduce a flat rate of tax relief on all pension contributions which will have an impact upon every single person in the UK making pension contributions hence forth. It will of course also (potentially) simplify understanding of these interesting beasts – possibly!

All of which is all very well, but why on earth should your ears be picking up?

Right now, an additional rate tax payer making a pension contribution will receive up to 45% tax relief on a pension contribution they make, and a 40% tax payer will receive up to 40%. This means that for an additional rate tax payer a £10,000 pension contribution has a cost as low as £5,500 and for a higher rate tax payer the same contribution has a cost as low as £6,000.

The consultation outcome has not yet been decided, but a flat rate would no doubt be lower than either of the above two rates, meaning that there may be a real advantage to reviewing your finances now and considering whether you wish to make a pension contribution in the current year, with the current rules. We are planning in this way for all of our clients who this applies to – this is simply good financial planning.

Imagine my shock then to turn on BBC Breakfast News last Friday morning to hear the business report discussing the above – and closing with ‘this may of course come into effect immediately on 16^th March’, to stop [those who are negatively impacted upon undertaking] ‘emergency planning’. So all thoughts of pension planning for higher and additional rate tax payers within the current tax year have been brought forward. Their planning is now lined up to be concluded by close of play on 10^th March, allowing time for monies to be processed and allocated before 16^th March.

There is always something to work towards when planning your finances, we all know that, and more often than not, life and all it entails, overtakes, and your planning goes further and further down the list. However, in this instance I would urge you to talk to your adviser, go through your planning and see if there is anything that they would advise you to consider in the coming weeks. This is a real deadline, one that will impact 4.8 million people if the reports are correct – I wonder how many of those people live in Sevenoaks? I wonder if any of those people are you? Please consider speaking to an authorised adviser sooner rather than later and make sure you are appropriately planned!

Carrie Devonshire BSc(Hons) FPFS

Director & Chartered Financial Planner

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