Monday, 3 December 2012

Men from another planet

On Wednesday, the Chancellor is due to present his autumn statement, and the speculation about its content is already rife.  One widely floated suggestion is that he will limit tax relief on pension contributions for higher earners.

This is a proposal I’d support.  Whilst giving tax relief to encourage people to save for their retirement through recognised pension schemes is a sensible approach, the current system allows disproportionate benefit to higher rate tax payers.  It’s an example of a state ‘benefit’ which aids the most well-off more than the poorest.
Sadly, the rumours suggest that rather than limiting tax relief to basic rate, he will instead propose a cut off point for the maximum level of tax free contributions.  Still, it’s at least a nod in the right direction, even if it limits the impact to those earning £200,000 or more a year.
It was the CBI’s response which struck me.  It warned that setting the maximum pension contribution level any lower than £50,000 a year would “hit vast swathes of middle-income earners”.  In short, they believe that people who are able to save £40,000 a year out of their income towards their retirement are “middle earners”.  It’s hard to believe that they inhabit the same planet as the rest of us.


glynbeddau said...

Lets face it John for the majority of the members of the CBI £40,000 is chickenfeed.

They probably think that £100,000 a year is what lower management earn.

And probably that even more powerful Institute of Directors think that anyone earning under £250,000is probably a middle earner.

Anonymous said...

I'm not surprised by the CBI this response about middle earners saving 50 K. People that save less than that don't count in that book, a rather like the 47% that Mitt Romney was speaking about in the U.S. presidential election was not worth worrying about as regards support they don't contribute anything. I'm sure that the CBI probably take the same view. It's not that they don't live in the real world we don't exist in theirs. And yet it is the middle class (by the American definition) that is the backbone of society, who spend most of their money on taxes and the economy, they don't save anything because they do not make enough money to be able to save.