The UK government’s forthcoming pensions tax simplification regime could give away £2 billion ($3.65 billion) to the country’s wealthiest in...

The UK government’s forthcoming pensions tax simplification regime could give away £2 billion ($3.65 billion) to the country’s wealthiest individuals, according to research conducted by Datamonitor, a research consultancy. The simplification process, which is intended to apply to everyone who is looking to pensions as a way to engage in long-term savings, will make it easier to make payments into pensions, invest in them, and withdraw benefits and will be particularly beneficial for wealthier people, according to the research. The research estimates that investments in Self invested Personal Pensions by wealthy customers could increase from £1.4 billion in 2004 to £4.6 billion by 2009. Assuming that most of this will be invested by higher rate payers gaining 40 per cent relief, this equates to around £2 billion in tax relief. Wealthier savers will also have the ability to invest in property after next year, according to Datamonitor. The research said the rules on gearing make property investments only viable for those with more than £75,000 in their pension funds. Wealthier individuals will gain proportionately more from rules allowing more freedom on how pensions are drawn in retirement. The cost of advice and administration means that this benefit will be “beyond the reach of ordinary people,” Datamonitor said.