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<p>Members of net pay pension schemes receive tax relief on their pension contributions
at their marginal rate as these contributions are deducted before tax is calculated.
Those individuals with income below the personal tax threshold do not pay tax.</p><p>
</p><p>Members of relief at source pension schemes, however, receive a 20% basic rate
top up on their pension contribution, even though they do not pay tax.</p><p> </p><p>The
Economic Secretary to the Treasury provided the Work and Pensions committee an estimate
of the cost of providing the same type of top-up as exist for those in relief at source
scheme to those in net pay schemes. This estimate was around £100m per tax year.</p>
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