A growing number of low paid workers are set to face a 'lottery' over whether they qualify for pensions tax relief after the government decided to maintain the threshold for a workplace pension at £10,000, according to Director of Policy at Royal London Steve Webb. The increase in the personal allowance from £11,850 to £12,500 means the number of workers affected will increase by 35%.
Mr Webb said this could lead to around half a million workers being placed in an anomalous situation where the question of whether they get pension tax relief will depend on the kind of workplace pension scheme their employer chooses.
Describing the potential gap between the point where people can start paying into a pension and getting tax relief on it as a "chasm", he concluded, "Government cannot keep kicking the can down the road on this issue. It now needs to be resolved as a matter of urgency.”