Pension tax relief

An economic analysis of the existing taxation of pensions (EET) versus an alternative regime (TEE)

The Government has recently issued a consultation document  which raises the possibility of a substantial change in the taxation of pensions.[1]  In this paper we assess the economic consequences of changing from the existing EET system (where pension savings and returns are exempt from income tax, but pension income is taxed) to a TEE system (pension savings would be from taxed income but with no further taxation thereafter), making use of two complementary approaches.