High earners are set to gain from a £70m pension perk, which allows them to save up to £40,000 a year tax-free. This comes as a result of new pension rules introduced in April 2015, which permit individuals to continue making contributions to their pension pot after they have begun drawing down on it. Previously, the limit was set at £10,000 per annum.
This change affects around 300,000 people, predominantly high earners, who will be able to take advantage of the increased allowance. It is estimated that the cost to taxpayers will be around £70m, a figure which has been criticised by some as a ‘tax giveaway’ to the wealthy.
Critics argue that the money could be better spent elsewhere, such as on public services, rather than benefiting those who are already well-off. They also point out that the new rules disproportionately benefit high earners, as they are the ones most likely to have the financial means to make such large contributions to their pension pots.
In contrast, supporters of the change argue that it encourages saving and investment, which are important for economic growth. They also suggest that it is fair to allow those who have earned their wealth to enjoy the benefits of their hard work.
However, the debate continues, with both sides presenting compelling arguments for and against the new pension rules.
Go to source article: http://www.telegraph.co.uk/finance/personalfinance/pensions/11785145/High-earners-handed-40000-pension-perk-at-70m-cost-to-taxpayers.html