BUDGET 2015 (CON)
Synopsis: The pensions minister expresses her views on pensions reform
It has been reported that the pension’s minister, Ros Altman, seems set against the development of a merged pensions/ISA product with no constraints on when withdrawals were taken, no tax relief on contribution and no tax on withdrawal.
She was commenting on the latest consultation on pensions tax relief issued at the time of the recent Summer Budget.
She is reported as saying “Certainly the current system would be better than just turning pensions into ISAs with no lock-in to help people save the money through retirement.”
‘Letting them take the money out tax-free would be a big mistake.’
The pension’s minister also appears to favour a top-up or bonus structure to encourage savers to lock their money away in pensions.
She says, ‘Tax relief is a regressive, unfair incentive for many people and it’s also very expensive. A top-up would be easier to understand.’
The idea of an “incentive to save” e.g. £1 of top up for every £2 saved up to a maximum saving of £8,000 ( £12,000 including the top up) was one of the proposals recently put forward by Michael Johnson of the Centre for Policy Studies.
Given the well-publicised cost of pension’s tax relief it is thought that some change to the way things are currently may be hard to resist.
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