The attractions of pension scheme enhancement are clear, especially if the employer meets some or even all of the contributions, but there are issues as follows:
• Little chance of a final salary scheme being available
• Poor investment performance
• High charges reducing the fund value over a number of years
• Ever lower annuity rates
The Autumn Statement has mixed messages on the tax structure. The bad news is that the annual maximum you can contribute is going down from £50,000 to £40,000, although this will not be until 2014/15. The lifetime allowance is a maximum value of your pension plan, which if exceeded creates a nasty tax charge of 55%. This allowance reduces to £1.25 million from the current £1.5 million, again as from 2014/15.