HM Treasury intends to give tax relief worth hundreds of millions of pounds to those earning over £110,000, it is being reported.
Treasury discussions this week are understood to have included a proposal to raise the "cliff edge" threshold from £110,000 to £150,000, at which pension contributions are counted, as earnings and lower tax-free allowances start to kick in, according to The Times.
The reports follow numerous calls for reforms to these rules, including scrapping the annual allowance - the limit on the amount that can be contributed to a pension each year while still receiving tax relief - which is capped at £40,000.
However, the impact of the tapered allowance has raised many concerns this year with many higher-paid public sector workers facing punitive tax charges for breaching the cap, which reduces by £1 for every £2 earned over £150,000.
This has increasingly led to senior NHS clinicians cutting their working hours in order to avoid breaching the allowance, the driving force behind the government's pledge to amend pensions tax rules as part of its bid to win the 12 December general election.
HM Treasury announced earlier this month that the government will hold its budget on 11 March, which could include proposals relating to tax relief reform. However, in a comment issued to PP, a Treasury spokesperson said it will not comment on "speculation" about tax changes.
Tax bills are not just a problem for the NHS, according to Intelligent Pensions technical director, Fiona Tait.
In response to the news, she commented: "The issue is one of over-complexity and ill-conceived tinkering with the pension tax relief regime.
"The obvious and most popular action would be to simply abolish the taper, and to call for a wider review into pension tax relief in general. The whole intention of pensions simplification in 2006 was to get rid of the complexity and manage costs via two simple allowances, and I can see no reason why we cannot return to that aim.
"Since 2006 there has been progressive tinkering with the rules based on short-term objectives, which have put us back to a position where tax relief is almost impossible for most people to follow and has resulted in a number of unintended consequences such as the impact on the NHS."
Other industry experts agreed pensions tax rules must be amended, including The People's Pension director of policy and former shadow pensions minister, Gregg McClymont.
"Pensions tax relief needs reform and simplification," he said. "Instead of more tinkering, the Chancellor should commit to a full review in the Budget.
He added: "A universal flat rate relief would help those most in need to increase their retirement savings."
AJ Bell senior analyst Tom Selby said the problem with the taper is not just the point at which it takes hold, "it is the it is the fact that, because things like overtime make earnings levels far from certain, many people will have no idea if or to what extent they will be affected".
He said: "When you combine that uncertainty with the mind-boggling complexity of calculating the taper, particularly in relation to defined schemes, it is far from clear that simply raising the point at which it takes effect will be enough to stop doctors refusing shifts.
"We also don't yet know whether this is viewed as the final solution to the NHS pensions crisis by the Treasury, or the beginning of a wider programme of pension tax reform. The optics are certainly tricky as this move alone hands more tax relief to higher earners, while failing to remove the mind-boggling complexity created by the taper."
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