Perhaps their employer will pay them extra salary in lieu of a pension contribution, but that is very inefficient from a national insurance point of view.
The pensions tax system should be encouraging people (or at least not discouraging them) to come out of retirement and go back to work to help out.
Perhaps now the LTA has gone, we can dismantle the framework of benefit crystallisation events, which sees retirement as only a one-way transition from accumulation to decumulation.
That is just too simplistic for today’s labour market, and frankly UK plc can no longer afford to have this pool of talent lying idle.
In conclusion, is it not time that we had a long look at the pensions tax regime?
I am sure IFAs have dealt with plenty of different retirement-linked conundrums in recent years. They could put this knowledge to work to contribute to an overdue pensions tax review that reveals where the old rules frustrate rather than encourage the behaviours that our post-pandemic, post-Brexit nation now needs.
Adrian Boulding is director of retirement strategy at Dunstan Thomas
