In between meetings I tried to keep up with events from Westminster and it seemed the second half of the Govt v Pensions match had gone badly for the away team.
Relaxing in the Tate this evening I chanced across a gaunt Joanne Seagers who looked exasperated. “How goes it” I asked her “Exasperating” she replied.
According to the NAPF wonkforce (who have studied the Green Book), Osbourne’s latest raid on pensions is likely to raise over twice the sum of the bank levy. Indeed, taken with previous raids, Osbourne has now snuck more than Brown snuck out of pensions (stealthy work indeed). As the “own goal” in the title suggests, Brown was assisted by a pensions industry that was so feeble the NAPF might as well stood for “Not Against Pensions Failing”.
This year, even the good news is billed as bad news for pensions. The increase in the personal allowance reduces the “Eligibles” for AE while the cuts in the Annual Allowance and Lifetime Allowance make pensions even less interesting for the NAPF core constituency – the mass affluent enjoying £2500 plus pension accrual in 2014-15.
Wonky stuff indeed. As most people are struggling to get £40k into a funded DC pension in a lifetime, Gorgeous George may have a point, pension tax relief is skewed towards those who already save. As we move into semi-compulsion, do we need to reward people who are chosing to save when they now pretty well have to save. Do we have to enroll people too poor to pay tax?
Compulsion and tax relief go together like alcohol and penicillin.
So what’s my take on this? A series of short-term measures that raise some revenues while eyes are off the ball? A cynical kick in the goolies for those enjoying pension good times or a balanced approach to redistributing Government pension spend from the pension rich to the pension poor.
My personal view is that it’s the final of these three and while I am no fan of attacks on pensions, I’d rather see some tax denied to those looking for tax shelters and those benefiting from DB largesse than see restrictions on the Basic State pension (hurrah for the triple lock!).
Perhaps the worst crime is the palliative for those on drawdown. Returning to 120% draw against GAD rates may be politically expedient, but it does nothing to solve the annuity problem. The annuity problem started in the Treasury (with QE). So should its solution.
- Time to get tough on “dodgy” pensions – the Regulator speaks (henrytapper.com)
- We won’t reinvigorate workplace savings like this (henrytapper.com)
- Warning over pension tax changes (standard.co.uk)
- Government ‘must not fiddle with the pensions tax regime again’ or fewer people will save, warns trade body (thisismoney.co.uk)
- NAPF Conference Report (from our man not on the spot) (henrytapper.com)
- Half of workers can not afford to retire, pensions industry says (telegraph.co.uk)
- Pensions tax relief is cut again (bbc.co.uk)
- Trade body urges Britain to leave pension tax alone (sfluxe.com)
- Warning over pension tax changes (belfasttelegraph.co.uk)
- What Steve Webb must do now. (henrytapper.com)