‘Does this latest outcry lead to the conclusion that accountants are more concerned with their own pensions than their clients… most of whom will not be affected by by annual allowance being cut to £40,000? Surely for the majority of SIPP advisers it will be business as usual?’

The decision to cut pension perks for top earners in last week’s autumn statement provoked predictable cries of outrage from accountants and financial planners.

My apologies to the high earners among you but the vast majority are not going to shed a tear about this no matter how much you scream and weep. In fact this obsession with the subject merely confirms the suspicion that many accountants and planners are more concerned with their own personal finances than those of their clients. Lest you missed it (and how could you have?), the lifetime allowance is being cut to a “pitiful” £1.25m from £1.5m. And the annual allowance will be reduced to £40,000 from April 2014.

This will not, as Mike Smedley asserted “result in many more people being unable to accumulate a decent level of retirement savings relative to their income”. Unless, like him, you’re a pensions partner at KPMG. Nor is it in any way “detrimental to economic growth” as Nigel Green of deVere Group claimed. And I’m sure it won’t “completely undermine confidence and trust in pensions”, as Raj Mody, head of pensions advisory at PwC, claims. Mr Mody also described it as “a direct blow to the pensions savings culture”. It may be a direct blow to Mr Mody’s pension. But I doubt his office cleaner will see any change to her pension.

The National Association of Pension Funds joined this ludicrous outcry by warning that those in a final salary scheme who get a big promotion or pay rise could suffer. Leaving aside the fact that they are lucky to be so endowed, they can rest easy in the knowledge that they can still scoop up unused contributions from the previous three years. And if their pay rise is big enough still to trigger a tax charge isn’t there an argument that this can be justified when most of the country is facing a squeeze until 2018 at the least?

HMRC figures show that the average annual contribution to pensions was £3260 in 2010/2011 – though George Osborne quoted a figure of £6000. I have no doubt that the average contribution by accountants and financial planners was very much higher. So the modal and median contribution figures would be lower still. I must plead guilty on behalf of my own industry for promoting this nonsense. Senior journalists, like accountants and financial planners can be highly paid. It is all too easy for all of us to lose sight of what is normal or average.

But surely of much greater impact to middle Britain will be the plan to limit the rise in the higher rate tax threshold to just 1 per cent in 2014 and 2015. This will drag more families into the 40 per cent tax bracket – and see more losing some of their child benefit – if salary rises continue at their current level of around 1.9 per cent a year. A more measured comment came from the Investment Management Association where Jonathan Lipkin, associate director, pensions and research, urged the government to examine the operation of pension tax relief regime as a whole “to ensure that the system of tax incentives operates in a way that is simple, predictable and encourages the government’s broader savings goals”.

Source: original article by Tony Hazell in FT Adviser here