NASUWT: 'Government taxes ambition'

Thursday, 9 September 2010 12:00 AM

The Coalition Government's proposal to limit tax-relief on annual pension contributions could see teachers paying for being promoted the NASUWT, the largest teachers' union, is warning.

On the same day as TUC figures reveal that top UK directors have amassed pension pots worth an average of £3.8 million, the NASUWT is criticising a plan which could hit ordinary teachers financially, simply for progressing their careers.

Reducing the pension tax allowance from £225,000 to between £30,000 and £45,000 means a modest pay rise could attract a tax liability that completely overshadows the increase in salary.

For example, an inner London teacher who crosses the statutory pay threshold and joins the upper pay scale (an increase in annual salary of £4,720 pa at 2009 rates) would, in all probability, be caught by the lower annual allowance due to the resulting increase in their pension benefit.

Promotion to a headteacher post or becoming an Advanced Skills Teacher could all mean a significant tax hit. Even a teacher who does nothing more than return to teaching after a long period away, for example to bring up a family, could potentially be in breach of the limit and face a tax liability.

Chris Keates, General Secretary of the NASUWT, the largest teachers union, said:

"It is outrageous that company directors can receive golden pension pots when thousands of ordinary workers could be punished just for showing an ambition to progress their careers. "This measure will be a huge disincentive to any form of career progression and could have a significant effect on schools' abilities to recruit, retain and promote the best teachers.

"This is a tax on ambition. "Discouraging low and middle level earners from saving for retirement in this way is simply another example of flawed economic thinking."

ENDS

Notes to Editors

A copy of the NASUWT response to the HM Treasury restriction of pensions tax relief consultation is attached.

Stuart Gannon
NASUWT Press Office

Tel: 020 7420 9681
Mobile (and out of hours contact): 07966 198894
Address: 5 King Street, Covent Garden, London, WC2E 8SD

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