The importance of the wealthy to out tax system is something I just don’t get. Every year I hear arguments against wealth taxes that start “the Government would never annoy..” and then roll out some special interest group which usually ends with “civil servants and MPs themselves”. It is our  fiscal Q-anon, a kind of  conspiracy theory that assumes that Sir Humphrey still holds the key to the Treasury’s drinks cabinet and that sacred cows cannot be slaughtered because the wealthy are too rich to fail.

I count myself rich and I have no doubt that if I was to lose my protected tax free cash sum, I would lose a valuable tax-perk. I need that cash to pay off my mortgage so I’ve screwed up my financial plan to roll on my pension another 3 years and taken my cash early. You may call me a victim of my own scaremongering but a bird in the hand is worth two in the bush and I seriously worry that I would have to pay another £25,000 in cash if my withdrawal had been limited to £100,000 tax-free. It should be noted that I turned down tax-free cash when I drew my DB – I didn’t need it and I felt I would live long enough to regret doing so.

I am now hearing from people who realise that because of the appalling administration of our DC pensions, it will not be possible to get their tax-free cash before October 30th. They now have to hope that they will not be caught out.

The lobby to stop tax-free cash being capped (probably at £100,000) is getting stronger. Here is a conversation on the AgeWage and Pension PlayPen group yesterday (well worth joining btw)

My point is valid. The relative deprivation for a pensioner with no other visible means of support losing a benefit relied on against a well-informed/advised rich person who has registered for a tax perk, forsaken further accumulation and is now threatened with losing a locked-in benefit.

You might argue that neither the destitute pensioner or the irate rich person deserve it. You would be right, if we had a tax and benefit system that locked in promises on a ratchet we would not see income and capital decrease in nominal terms. But that is not the way it works. Retrospective taxation happens, it happens on wealth and it happens on benefits and it happens because of Overton’s Window, where an opportunity for unpopular but necessary reform exists in a moment of time.

Yesterday, the Treasury let it be known that they couldn’t/wouldn’t/shouldn’t reduce marginal tax reliefs on pension contributions. Higher rate tax-payers breathed a sigh of relief and forgot that pension wealth tax perks (TFC and IHT exemptions) are not the same as pension contribution reliefs (the point of my article yesterday).

Overton’s window slammed shut on higher rate tax relief because the Treasury once again reminded the Chancellor that without closing the door shut on employer’s tax and NI exemptions on contributions, the Chancellor would just encourage more salary sacrifice.

But tax-free cash and inheritance tax exemptions are different. The previous Chancellor has already limited tax-free cash to £268,175 for all but a very few people with fixed protection  (a legacy of the lifetime allowance).

Do these very few pension oligarchs get special treatment when pensioners needing winter fuel allowance don’t? Do they really regard their tax privileges as inalienable?

I think it is a poor state of affairs that we should even think so.

Overton’s window was open for the rich too. They had their window of opportunity and could have jumped right through it. They live by the fiscal sword and that sword can be turned on them.

I am likely to win few friends amongst those who “matter” by saying that I don’t give a flying fig about the residual importance of the LTA for tax-free cash preservation.

Pensions should not be about wealth creation or wealth preservation , they should be create insurance against retiring poor and living too long .

If Rachel Reeves chooses to take away the Winter Fuel Allowance from pensioners and doesn’t curb the pension tax exemptions on pension wealth, I will think the worse of her.