UK - Industry commentators have attacked the lack of any government climbdown over plans to restrict tax relief on pension contributions for higher earners.

Last year’s Budget and pre-Budget report contained proposals to taper tax relief from 50% for individuals earning under £150,000 a year to 20% for those earning £180,000 or more. In spite of vociferous criticism, which surfaced during the course of the subsequent public consultation, the chancellor, Alistair Darling, said the government would go ahead with the plans.

Lynda Whitney, pensions consultant, Hewitt Associates, said: “The Government is pressing ahead with the attack on high earners in line with its original, complex proposals, and has taken scant regard of the many voices proposing more workable arrangements. The consultation raised important questions regarding, for example, issues for people whose redundancy packages push them above £130,000. The chancellor appears to have ignored these concerns.”

Whitney added: “There is a real danger that the legislation may be rushed through Parliament before the general election  - and therefore without proper scrutiny. This is likely to compound the difficulties for individuals and schemes in working with legislation which in its nature is already extremely complex.”

Joanne Segars, chief executive, NAPF, said: “The Government should have abandoned its damaging pensions tax plans for higher earners which will only serve to weaken pension provision for all. The NAPF has put forward a fairer, simpler and more workable alternative.”

However, according to Aegon, the confirmation that there will be no further changes to pension tax relief in the short term is welcome news.

Rachel Vahey, head of pensions development at Aegon, said: “Confirmation that the government has resisted the temptation for further tinkering is welcome. The government should now pledge to maintain the status quo, at least in the medium term, to give people confidence in the stability of pensions in the run-up to the introduction of automatic enrolment in 2012.”

But Vahey said that anecdotal evidence showed employers would find last year’s proposals complicated to implement, and were becoming disillusioned with pensions as a long-term solution to meet their employee benefit needs.

“There’s already a real fear the effect of last year’s changes will impact much wider than the people directly targeted,” she said. “Using the current architecture of annual or lifetime allowances to restrict pensions tax relief would be simpler for employers to work with, and for people to understand.”