Ros Altmann
Well done Ros Altmann for having the balls to point out what is apparent to all of us, that the tax-payer is offering enormous incentives to companies and savers to build deferred pay for the future.
I wish I could have been at the meeting Ros had with the affable but very serious John Stapleton where she explained the following suggestion to the Treasury
The former pensions minister said that, as at least 25% of each pension fund originates from tax reliefs and 25% can be taken tax free, it would be justified for the government to require schemes to invest this in the UK.
Altmann explained: “The gross reliefs to UK pensions each year amount to over £70bn of taxpayer money. A quarter of all pension funds can be taken tax free and no National Insurance is paid on pension income.
“There is, therefore, a clear justification for government to require UK pension funds who receive these expensive reliefs, to invest at least 25% of each new contribution, into UK markets to help boost growth as the quid pro quo.”
You can hear the grinding of molars among the fiduciary brigade who consider tax relief a right.
Altmann added: “This is incentivisation rather than mandation. If trustees or managers don’t want the tax reliefs, they can invest 100% overseas, it is their choice.”
I have continual fallings out with Ros but not on this. I was quoted over the weekend in the Guardian asking a question when Rachel Reeves assumed the role of Chancellor
Getting on for a year ago I referred to statements made by Reeves as she assumed power
I see Rachel Reeves statement on July 8th that British pension funds should invest British as part of a global trend, including economies as diverse as Canada and Italy, to direct pension funds to invest domestically. The worry is the incontrovertible truth that American tech stocks have driven returns over the past five years to a point where British companies can seek private capital and/or list in America and get global rather than local reward. Indeed many companies that would have listed on AIM are now listed on the Nasdaq.
Against the prevailing wisdom that our pension fund money will heal the wounds of a bleeding stock-market is the experience of economies such as Japan and Korea that imposed controls on pensions requiring them to invest heavily in its country’s corporate debt, to the detriment of those who are now retiring.
I was then and am now against mandated contributions into Britain but I am also against the fiscal irresponsibility of the pension investment community who cannot see some balance here.
I love Ros Altmann’s wicked suggestion and I love John Stapleton’s low-key delivery of her suggestion.
If you have not considered this argument seriously, you clearly have your ears blocked to the nationalism of Reform and the revulsion of ordinary people that they are having to meet the £70bn tax loss from private pensions with winter fuel payments
But I don’t suppose winter fuel payments mean much to those in the private pension industry, why should they- they matter to people who don’t matter.