Complexity is deterring wealthier individuals from saving through pensions, says Matt Phillips, MD of Thomas Miller Investment

Using an alternative system of Tax-Exempt-Exempt (T-E-E) would require faith by the general public that a future government would not impose tax on taking retirement benefits. It is questionable whether this faith would exist and therefore act as a reason for individuals taking less personal responsibility.

For those who face Lifetime Allowance and Annual Allowance issues the current system is very complex. An increasing number of key decision makers in businesses are being dis-incentivised, through complexity, to save through pensions.

With contributions capped at £40,000, the Lifetime Allowance no longer works as a mechanism to recoup excess tax relief provided. It is now a tax on investment performance. This is both unfair and acts as a disincentive to make savings into pensions.

The proposed tapering system for additional rate taxpayers is very complicated, especially for active members of defined benefit pension schemes. The amount that can be contributed should be set at £40kpa for everyone and a uniform rate of tax relief set to offset the cost to the taxpayer. A uniform tax rate of 30% would make system affordable, reduce complexity, redistribute tax relief to the lower paid and create a fairer system.

The most effective method of encouraging savings would be for the Government to use the tax system to encourage financial education. Currently advice on pensions can be given to an employee up to £150pa without it creating a p11d benefit. This allowance should be expanded to cover all sources of retirement income and raised to £500pa. In the 10 years before state pension age the limit should be raised again to £1,000pa to reflect the added complexity at retirement.

Roland Cross / Gareth David / Ed Hooper

T: 020 3697 4200

Thomas Miller Investment provides investment and wealth management to institutions and private clients both on and offshore.

Thomas Miller Investment was formed as a separate Investment business over 25 years ago and has total assets under management of over £2.9bn. Its investment and wealth management teams are based in London, Edinburgh, Birmingham, Southampton and the Isle of Man

Thomas Miller Wealth Management is a national fee-based Independent Financial Advisory firm, specialising in strategic pension and investment advice for private individuals.

Thomas Miller Investment is the trading name of the businesses in the Thomas Miller Investment Group. Thomas Miller Investment Ltd and Thomas Miller Wealth Management Ltd are authorised and regulated by the Financial Conduct Authority.

Thomas Miller Investment (Isle of Man) Limited is licensed by the Financial Supervision Commission of the Isle of Man.

Thomas Miller is an independent and international provider of insurance, professional and investment services.

Founded in 1885, Thomas Miller's origins are in the provision of management services to mutual organisations, particularly in the international transport and professional indemnity sectors; where today they manage a large percentage of the foremost insurance mutuals. Thomas Miller also manages insurance facilities for all the self-employed barristers in England & Wales, as well as trustees of pension schemes, patent agents and housing associations.

Principal activities include:

• Management services for transport and professional indemnity insurance mutuals
• Investment and wealth management for institutions and private clients
• Professional services
• Building defects insurance