The FT is seldom wrong on matters of public policy. Only a few weeks before the promised budget announcement it headlined last night…
Which is precisely what everyone in pensions worried about and what the rest of the country is going to vote on in 2020.
The FT is clear, that Osborne’s motivation is political, Osborne and the Treasury will argue that it is in the national interest and – bizarrely – it is.
I say – bizarrely – as we have got so used to self-serving policies designed to conserve the status quo that a genuinely radical policy that takes tax-breaks from the wealthy is a shock to the system. It is quite extraordinary that in the long years of Labour Government , neither Gordon Brown or Tony Blair were able to take on the bulwarks of pension privilege. It would be even more extraordinary if the “lads from St Pauls and Eton” were able to do just that.
So what of the detail?
I still see the destination as TEE but what is being presented through the FT’s research is the Treasury looking to displease all stakeholders in equal measure. IF TEE – as we have it in ISAs is clean and understandable, what is emerging is quite the opposite.
The flat rate solution with Government top-ups replacing tax relief has more to do with relief at source than net pay. It looks like the cost to the National Insurance system from salary sacrifice will be squeezed making pensions more expensive to many employers who benefit from “flex” and it looks like the heady days of higher rate relief are gone for ever.
How this is going to work in practice is still under discussion but my understanding is that this is going to be extremely messy.
How will the opposition see this?
Well they really ought to be applauding. The dirty work is being done by the posh boys while the labour hierarchy are the right side of 60 for this to be (from a personal viewpoint) academic- I mean -look at them