Two-minute survey: Give your views on government pension tax relief reforms

What’s on the table
The new government is seeking views on possible large-scale reform of the existing, long-established system of tax relief. In particular the Government is seeking views on whether to switch from a “front-loaded” to a “back-loaded” system of tax relief. A “back-loaded system” would be similar to existing individual savings accounts (ISAs), but any money you saved into it would not get tax relief.

We need your views to help us with our response on your behalf. It’ll take two minutes to complete our quick professional pensions survey, which is being held in conjunction with other professional associations.

These revolutionary changes could mean:

  1. the effective withdrawal of higher rate tax relief
  2. the removal of the option to take up to 25% of your pension pot as tax-free cash 
  3. yet more upheaval, complexity, confusion and uncertainty – the things we need to get rid of in our pensions system.
  4. the potential end of occupational pensions for professional people.

The government is also considering keeping the current system of pensions but reducing higher rate relief to 30% or even 20% for all taxpayers. Whichever way you look at it, this is a very serious issue for the vast majority of HCSA members who are – or are likely to be – higher rate taxpayers.

What we’re doing
HCSA is working on a joint response with other professional associations. Between us we represent over 170,000 professional people.

  • The British Medical Association (representing doctors and consultants), 
  • The FDA (senior civil servants)
  • The Chief Police Officers’ Staff Association 
  • The Police Superintendents’ Association of England and Wales.
  • The British Airline Pilots Association


What we propose to say in our response to the Green Paper

  • We need stability in the overall pensions system and the “de-politicisation” of the whole pensions tax relief debate – we urge government to “hit the pause button” and consider setting up a new independent pensions commission on retirement savings, with all stakeholders represented including professional people such as pilots, doctors, senior civil servants and senior police officers.
  • We should retain the tried, trusted, easy-to-understand and incentivising “front-loaded” tax relief system – we believe it is clearly understood by many/most people, provides strong incentive to save and benefits everyone, higher and lower paid. However, we need to review the treatment of defined contribution (DC) and defined benefit (DB) to remove anomalies – e.g. remove Life-Time Allowance (LTA) but keep Annual Allowance (AA) for DC schemes; remove AA (but keep LTA) for DB schemes; apply the same “triple lock” indexation formula to AA and LTA – CPI, average earnings or 2.5%, whichever is highest (as used for the state pension). We should also review unfair tapering of AA for those with adjusted earnings of over £150k (which could affect members with normal taxable earnings of £110k or more).
  • We should be promoting the benefits of the existing system in the workplace to encourage adequate pension saving – and not on turning the system upside down and creating even more uncertainty. We need better workplace communications and closer working between employers and TUs.
  • DC pension schemes are still not likely to deliver a satisfactory retirement income – at best, a DC member can expect to retire at age 65 on around 25% of final salary after a 30-year career. Government should be creating the environment to maintain and improve DC pension provision.
  • DB pensions are already under threat as a result of low gilt yields, caused in part by government response to the post-2008 financial crisis. Removing “front-loaded” tax relief would make DB schemes even more expensive to run and would lead to further closures.
  • It’s not fair to keep on hitting higher rate taxpayers – professional people are already affected by lower Annual Allowance, lower LTA, tapering of tax relief on “adjusted” earnings over £150k (which potentially hits those with taxable earnings over £110k). An additional £6 billion per year has already been raised by these changes. Enough is enough.
  • Click here to read more detail on our proposed key messages

What you need to do
We need evidence to show the Government that these proposed changes would make professional people much less likely to save properly for their retirement.

The survey contains just FIVE QUESTIONS and will take no more than a couple of minutes. Take our Professional Pensions Survey now.

Also, if you have already been hit by a large tax bill as a result of the current AA and/or LTA, please provide us with details so we can include this information (anonymised) as part of our response to the government consultation. All information will obviously be handled on a strictly confidential basis.