The Treasury stand accused of faking a £4bn pa tax on 100,000 of the super-rich.
George Osborne stands accused of using this fake tax to justify draconian cuts on the wider population.
Government stands accused of a gross act of cynical deceit..
Last week the Treasury announced plans to introduce new measures to curb the amount of tax-relief being claimed by the super-rich on pension contributions and to pay more tax on exorbitant benefits from their pension plans.
When I studied these measures the Treasury numbers did not stack up. Subsequently I have talked with one of Britain’s leading supplier of super-rich pensions (SIPPs) who tell me that they believe the Government have grossly overestimated the revenues that will be brought in by these measures.
I have also talked to the Pensions Director of one of our top 30 public limited companies with one of the most generous company pension schemes and some of the highest paid employees in Britain. Of the 40,000 members of that company’s pension scheme, only 10 have been identified as being hit by the primary measure.
I hope that a financial journalist will read this and challenge the Treasury, using the powers of the Freedom of Information Act as to how HMRC are going to save £3.5bn pa from the changes to the Annual Allowance.
On the face of it, reducing the amount that the super-rich can stuff into pensions each year from £255,000 to £50,000 looks a big hit. But the Treasury is allowing big earners to mop-up allowances from previous years creating a window of opportunity through which, with the help of their advisers, they will jump.
That is of course, if they can be bothered to play the pensions game at all. The vast majority of the big-earners in question have their money parked in Monaco, Belize, the Cayman Islands and various other worldwide hideaways about which the Government are doing very little.
I would be very surprised if the changes to the Annual Allowance save the Treasury a quarter of what they claim.
The other big idea in the Treasury’s paper is equally supine.
The Treasury want to impose extra tax on people whose pension pots exceed £1.5m (down from £1.8m). Again it seems like a tough measure. Then the detail emerges. As we all know – pensions are getting more expensive and therefore more valuable. The Government has told the Treasury that this should be reflected in the calculation of pension pots. The Treasury has ignored this advice meaning the £1.5m figure is a fake figure – as it relates to the valuation of defined benefit pensions.
The Treasury has taken with one hand and then given back with the other! Rather naively, I supposed that this was a case of “boiling frogs” – introducing a measure in a half cocked way to get the super-rich comfortable and then turning up the heat gradually so the frog doesn’t jump out of the pot. I’ve changed my mind.
So we can be absolutely clear about this. The bit of advice they ignored was to factor in to the new calculations the changes in life expectancy we’ve recently experienced in Britain.
These changes are explicitly referred to as the reason why the rest of us have to delay the taking of our state pensions till 66.
The impact of properly valuing these defined benefit pots would be to put a whole bunch of senior civil servants into the super-rich tax-bracket. If my pet journalist is still reading, can you also ask the Treasury how many of its mandarins responsible for devising these measures have prospective pension between £61,000 and £75,000?
The £4bn to be raised by the AA and LTA measures is a fake number and the measures have been diluted to provide loopholes for the super-rich and pension rich to get themselves off the hook.
Despite this, Osborne is waving this Treasury Paper around justifying to the nation the rise in the State Retirement Age, the freezing of pension credits , the halving of the social housing budget and the many other cuts to the services on which the poorest in our society depend.
He is telling us they can be justified because of the fake tax on the rich.
There is no such thing as”Cuts Avoidance”. There is no benefits loophole that can be used to return your basic state pension, unfreeze pension credits, restate your subsidised rent on your council house. Cuts are cuts, the rest of us have to suffer the full impact of these cuts without any remission.
While the rich can transfer their pensions into offshore havens (watch out for the rise of QROPS tax avoidance measure), the rest of us are left in cold drafty Britain paying the price.
I am prepared to pay my part in restoring Britain to solvency. I am happy that the Government is prepared to take on the issues surrounding Public Sector spending and I’m prepared to forego some of the pension I’ve paid for through national insurance over my working life.
I do so because I recognise that times have changed;-I’m going to live longer and it’s not fair that my pension is paid at the expense of my children’s future taxation. I buy the Government’s argument on longevity.
But I’m not putting up with lectures from a man, a Department and a Government that shields the super-rich and their cronies from paying the same price
- Pensions tax relief plans: a fairer system or a perk for the super-rich? (guardian.co.uk)
- Osborne defends massive £81bn cuts (mirror.co.uk)
- IFS exposes fairness gap in spending review cuts (guardian.co.uk)
- Spending review 2010: cuts hurt families with children most (telegraph.co.uk)
- Spending Review 2010: cuts leave middle class £10,000 worse off (telegraph.co.uk)
- Spending review: thousands will spurn pay rises to keep child benefit (telegraph.co.uk)
- Final-salary pension holders face ‘massive’ tax relief curb (guardian.co.uk)
- Middle earners on fresh pensions alert (independent.co.uk)
- Spending review 2010: Nick Clegg says IFS claims poor will be hardest hit are ‘nonsense’ (telegraph.co.uk)
- Pension tax relief to be cut (confused.com)