5th March 2015
The Labour party are allegedly concerned about the Conservatives launching their own tax raid on pensions in the budget on 18 March according to a report in The Times.
The report comes after Labour announced plans last week to use cuts to pensions tax breaks to fund their tuition fees policy.
Looking at the claims Hargreaves Lansdown head of pensions research Tom McPhail believes it is unlikely the government is planning a last-minute tax raid on pensions.
He said: “Conservative representatives in government have repeatedly stated that they have ‘no current plans’ to alter pension taxation and whilst this does leave some wriggle room, the frequency and strength of their denials do suggest that perhaps they mean it. It would also be inconsistent with their election strategy which sought to make pensions and pensioner interests one of their stronger battlegrounds.”
McPhail said that while the case can always be made for pension tax reform, given “the uneven distribution of tax relief on contributions”, he added any future changes should be held off until the seismic reforms of auto-enrolment and pension freedoms are bedded in and their consequences understood.
He added that any alterations should also “be based on robust evidence that it would promote a stronger retirement savings system” and “not reduce the overall amount of tax relief being allocated to pensions”.
McPhail said: “With so much disruption to people’s retirement savings, it would be irresponsible to start tinkering with the taxation of pensions for short term political gain.”