And specifically, pensions tax relief reform. And here it is:
The Government is gearing up for a major raid on some of Britain’s most generous pension schemes which could see doctors’, teachers’ and senior executives’ retirement funds cut by more than a quarter, the Telegraph understands.
In private talks with industry, Ministers have floated plans to move savers with final salary pensions into a separate tax regime. They would then receive less generous tax perks than other savers.
Not convinced his union paymasters are going to be happy with it:
The Government is desperate to reduce the £50bn a year it spends on pensions tax relief – and ministers eye this move as one of the easiest targets.
Experts predict the changes to final salary schemes alone would save the Treasury around £7 billion a year.….
But insiders say the Treasury is likely to go further by cutting 40pc higher-rate tax relief on future pension contributions in half to just 20pc.
Be interesting to see which way he jumps here, no?
For reforms to final salary schemes aren’t quite what he was arguing for……
One of the most generous final salary schemes still extant is that for MP’s. Somehow I can’t see Westminster turkeys voting for Christmas.
KRL, quite. And what of the mandarins’?
I visited the LHTD’s blog got the first time today. Jesus wept, circle-jerk doesn’t even begin to describe it.
Ritchie will support the interests of his union paymasters as well those of his wife. He will oppose any changes to public sector final salary pensions.
I’m not sure it needs a separate tax regime, but the notional figure they use for calculating the annual deemed contribution certainly needs to be made more realistic.
“They claimed 64pc of their members would be less likely to save for retirement if higher-rate tax relief was reduced to 30pc. 2
So 64% or more of public sector trade unionists are liable to higher-rate tax?
Actually the fair way to implement equality would be to make employer contributions to a DB (usually final salary) pension a taxable benefit. Of course if a civil servant got promoted a year before retirement then he/she would have to pay tax on a £m+ boost to the value of their pension. No wonder FDA is complaining and will try to undermine any attempt at fairness.
“The Government is desperate to reduce the £50bn a year it spends on pensions tax relief…”
The government spends fuck all on tax relief, it just steals slightly less.
“Actually the fair way to implement equality would be to make employer contributions to a DB (usually final salary) pension a taxable benefit.”
If the pension is taxed when drawn then I ‘m not sure making the employer’s contribution a chargeable benefit is ‘fair’. As pension are – or at least were – deferred income, the quid-pro-quo for being taxed on drawing was the ‘tax relief’ on making the contribution. However, it seems the link is being lost with each succeeding budget.
@ Ironman
I should have prefaced that with the comment that tax relief on contributions by higher-rate taxpayers is being eroded but tax relief on contributions by their employers are unaffected. I unwisely took that as read in the context of the article – but that was not stated on the thread.
Remind me again, this is a Tory government right?
Can someone please explain to me what benefits we got by voting for this branch of the Liberal-Democrats rather than an actual conservative party?
Thrift is good. Thrift should be rewarded. If governments set up idiotic incentive schemes, the correction to those should not be applied retrospectively.
SMFS
No need to explain anything – it was the first line that was wrong.
And that’s not a personal value statement or anything, simply evident from the facts?
“Retrospective” – I know the boy George has form, but do we have hard info for that?
SMFS and PF the problem is that the “tax reliefs” on pension savings are actually absorbed by the fund managers’ charges. Compare saving via an ISA without the tax relief on contributions and contributing to a pension fund. I bet the ISA would out-perform the pension fund.