§ Mr. PaiceTo ask the Chancellor of the Exchequer what the effect is on the maximum pension contributions eligible for tax relief for(a) the employer and (b) the employee if a pay increase is (i) compulsorily staged by the employer and (ii) voluntarily foregone by the employee. [121369]
§ Miss Melanie Johnson[holding answer 9 May 2000]: In broad terms, tax relievable pension contributions that an employee may pay are based on a percentage of taxable earnings received for a year of assessment.
The treatment of employer contributions depends on the type of pension scheme. With tax approved occupational pension schemes, the employer's contributions are set by the scheme actuary according to the level of benefits promised by the scheme. For a personal pension scheme, total contributions by the employee and employer combined must not exceed an age-related percentage of the employee's taxable earnings for the year.