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Taxation of Private Pensions in the UK


Private pension saving is a key component of retirement saving in the UK. The most recent data available shows that four-tenths of private household wealth is held in private pensions. Among those aged 55 to 64 nearly 73 percent had accumulated some private pension rights, with the median holding among those with some pension rights being £149,300 (Office for National Statistics 2015). This is partly explained by the fact that holding savings in pensions is, on average, tax favoured relative to other saving vehicles. The fact that large amounts are placed in private pensions also makes it important that the tax treatment of such savings is well-designed.