Harrier123,
These proposed changes are far more insidious than simply scrapping the 16/38 IP. Given the way that the Treasury and HMRC calculates pensions means that if the annual contribution is limited to 40K/p.a., this could quite conceivably lead to people - not particualrly senior ones at that - getting a tax bill every year based on their pension. If you then get promoted, standby for a potentially eye watering bill.
So whilst at the moment it's only promotion above sqn ldr (I believe sqn ldr - wg cdr and a couple of the air ranks) that are hit by this charge, can you imagine the damage caused to Defence when it becomes apparent that flt lts and those on equivalent salaries / pensions start to get a pensions-linked tax bill on top of an effective income tax rate of 50%? And based on how the deemed contributions are calculated, with an actuarial factor of 16 applied, it probably won't be that difficult to hit a 40 or even 30K limit each year.
This is totally incoherent thinking by the government, designed purely to appeal to mob rule against bankers and financiers, but which we are dragged in to. On the one hand people are encouraged to save, but when they do, they are obviously wealthy if they can afford to put money away (is that an implicit admission of just how expensive the UK is to live in???) and thus are ripe for getting hit by a tax bill. That many other ordinary individuals are going be caught up in it means nothing to our millionaire cabinet members who just want to get re-elected and continue to enjoy the trappings of power before drawing their platinum plated pensions.
Last edited by Melchett01; 15th February 2012 at 13:32.