David Brooks, Technical Director at Broadstone Corporate Benefits.
Lifetime allowance – no more reductions
“Steve Webb has aimed the latest kicks on the field of pensions that has become a political football for all the main parties. Broadstone questions the point of developing a pensions system where an individual’s ability to save will be restricted on the way in by an Annual Allowance limit set too low and charged on the way out by a Lifetime Allowance also set too low. The aim to hit the wealthy in such a way risks punishing those that have done the right thing to save for their future and either invested well for those benefits to rise or worked hard to save sufficiently for their retirement. The proposed reduced Lifetime Allowance will currently buy a pension of about £30,000 pa, are the Lib Dems really saying they want no-one to aspire to a higher retirement income?
“Ironically such a move will also disproportionately impact those in the public sector whose pension benefits will butt up against this upper limit leaving relatively low-paid public servants walking straight into a potentially large tax charge. The Lib-Dems should recognise and accept that limits and disincentives for individuals to save for their retirement are not the way to fund the social services our country needs.”
Tax-free cash
“We are pleased that pensions minister Steve Webb has pledged to spare the sacred cow of tax-free cash from a cap or restriction. It’s nice to have something that, although an anachronism, is well and truly to the advantage of the individual and ingrained in the system. It is also the single most simple thing of this exasperating pensions system that people can hold on to and understand. Everyone knows it is there and looks forward to getting it. Long may it continue.”
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