Before breathing a sigh of relief, the pension industry should remember the diversionary tactics put in place by the Treasury prior to the introduction of Pension Freedoms , the budget before last.
Tax relief- as it impacts you and me- is all amount we get in our pay packet (and if we are higher rate tax-payers- self assessment).
But there are other ways to raid our pensions than through our pay-packet. Gordon Brown taxed pensions by restricting the tax-exempt status of dividends and the Government can collect tax owed to it by getting schemes to reduce pension benefits at retirement (a system known as scheme pays).
If anyone thinks that a statement from the Treasury telling us what the Chancellor is going to do in the budget, is being naive. That’s not the way things work.
I read the statement issued to the Press on Friday as a potential smokescreen for whatever Osborne is really up to. If you think that personal tax-relief is what this is all about, you should look at this table.
The big ticket items that the Chancellor can have a go at, cannot be collected via PAYE. Employer contributions to Defined Benefit Schemes, can only be valued by pension experts , a PAYE approach doesn’t work.
The CBI rightly point out that any system of tax-relief collection using the employer, will place a further strain on payroll. But collecting tax from pension funds puts no strain on payroll – though it would reduce pensions.
I have a sneaking feeling that Osborne knows exactly how to get his pound of flesh and it won’t be through our pay-packet (or end of year tax-bill).
Don’t get fooled again, I reckon this Chancellor is making a monkey of us all.