High earners have been urged to make the most of their pension contributions while they still can.
Sean McCann, tax specialist at insurance, pensions and investment specialist NFU Mutual, stressed that high earners try to maximise this year’s tax-efficient pension contribution immediately.
“Someone with a yearly income between 50,000 and 130,000 should consider investing more of their savings and disposable income before the reduced annual allowance comes into force in April 2011,” he remarked.
Mr McCann explained that the Treasury has simplified some of the rules, which he said is good news for people earning over 130,000 each year.
“Full tax relief will be available on the first 50,000 of contributions,” he explained. “Currently, tax relief is restricted for those with an income over 130,000.”
Meanwhile, Charlie Thomas, executive editor at Pensions Management, claimed recently that linking the state second pension to the consumer price index (CPI) will see state pensions become “better off” in terms of indexation.
He explained that as the retail price index is traditionally higher than CPI, “the basic payment will rise by about 4.49 a week from April to about 102.14, breaking the 100-barrier for the first time”.
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