A simple alternative to the complexity of tapering tax relief would be to reduce the annual allowance to a level that achieves the same end, say £50,000. Unfortunately, it looks like industry lobbying has failed to convince the Government that there is another way and we're stuck with these complex rules.
A welcome development, although coming up with a proposal for small personal pension pots that wouldn't be open to manipulation will be a challenge. The joint life annuity proposal is good news. It'll be interesting to see what they mean by "small pension pots" when we get more detail.
After the fireworks of the last Budget and December's Pre-Budget Report, the 2010 Budget was (thankfully) a bit of a damp squib for pensions, largely confirming what we already knew:
Since 1 December 2009, members of occupational pension schemes have been able to commute small funds of £2,000 or less from their schemes regardless of what other pension pots they have. In the Budget, the Government out of nowhere stated that it was open to proposals to extend those rights to personal pension funds and to allow couples to pool small pension pots in order to buy a joint life annuity.
However, whatever simplification was adopted would have to avoid additional costs for the Exchequer or HMRC and not be open to manipulation.
The information provided is based on our current understanding of the Budget 2010 and associated documents and may be subject to alteration as a result of changes in legislation or practice.