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High rate taxpayers avoiding pension schemes

High rate taxpayers avoiding pension schemes

Category: Pensions

Updated: 05/10/2012
First Published: 16/08/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Thousands of higher rate taxpayers are turning down free money by not contributing to a pension scheme.

One in four higher rate taxpayers do not pay into a pension, with around 21% of those earning between £42,275 and £149,999 claiming they cannot afford to make monthly contributions.

It is thought that around 216,000 employees are missing out on claiming up to £438 million a year in pension tax relief.

By making a contribution of £425 per month, a higher rate taxpayer would receive a tax relief of £85, equating to an extra 'free' £1,020 a year which could be used to supplement savings for retirement.

According to the survey by Prudential, 43% of those not making pension contributions haven't made any alternative plans for funding their retirement, whilst 2% believe they will never retire!

Prudential's tax expert, Matthew Stephens, said: "Pension saving offers valuable tax reliefs to all workers and particularly higher rate taxpayers.

"It is worrying that so many higher rate taxpayers say they cannot afford to save into a pension despite earning healthy salaries.

"The good news is that it is never too late to take action on saving for retirement and we urge all workers to seek advice on long-term retirement planning."

What Next?

Learn about your pension options

For help or a pension quote call TQ Invest:
0800 294 7203

Looking for a pension to help you save for your retirement? TQ Invest can help.

Find an old pension – contact the Pensions Tracing Service on 0845 600 2537

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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