Labour could bring back the lifetime allowance on pension contributions, a move that could be “worrying for savers”.
If Keir Starmer gains power at the upcoming General Election, he is reportedly planning to reintroduce the lifetime limit at a level that reflects pressures on public sector workers, according to The Sun.
It has been scrapped by the current Conservative Government, after previously being set for £1,073,100 for the 2022/23 tax year.
Terminating the allowance was in part done to protect high-earning public sector workers such as doctors from being taxed if they went over the limit.
Labour plotting 'concerning' pension move - 'Worrying for savers'
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Tom Selby, director of public policy for the investment platform AJ Bell, said: “The party’s apparent insistence on bringing back the lifetime allowance if elected is concerning.
“Pursuing this policy would create huge, unwelcome complexity in the pension system and send a worrying message to savers and would-be savers.”
The lifetime allowance is the total amount of money built up in a workplace defined benefit pension scheme and savings in a defined contribution pension before facing a further tax charge.
The tax is levied on the excess over the allowance and the state pension is not included in the calculation.
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Labour could bring back the lifetime allowance on pension contributions
PAAnyone drawing their pension is still liable to income tax.
Jeremy Hunt announced its cancellation last year as part of his Spring Budget.
In its place is a tax regime where consumers can take as much income as they want from their pension and checks are only be made on lump sums taken.
Jeremy Hunt scrapped the allowance last year
PAA recent suggestion that the state pension age would need to be raised to 71 by 2050 to maintain the “status quo” has been met with widespread criticism, with experts warning of the potential impact on future retirees.
Concerns over the long-term affordability of the triple lock and changing life expectancy figures has sparked discussion over what the future for pensioners in the UK will look like.
These anxieties have been reflected in a recent survey carried out by the Pensions Management Institute (PMI) which found that nearly half of Britons have changed their retirement plans due to the cost of living crisis.
This includes 24 per cent of people who are set to delay their retirement and 23 per cent who have reduced their pension contributions.