Chancellor Philip Hammond today took questions on the controversial annual allowance taper and the impact it is having on the NHS.
You can watch the debate from 11.49am here: https://www.parliamentlive.tv/Event/Index/a3360393-2e7d-4ded-8de4-3f3ad16e8998
Key points:
• Hammond says controversial annual allowance taper “necessary to deliver a fair system and protect the public finances”
• Treasury and Department of Health instead looking at creating “additional flexibility” for high-earning doctors affected by the taper
• Health Secretary Matt Hancock expected to make an announcement on the plan shortly
Tom Selby, senior analyst at AJ Bell, comments:
“By introducing the wrong-headed pension tax taper the Government has created an entirely avoidable crisis within the NHS. The Treasury’s refusal to countenance the obvious solution of scrapping the taper is therefore deeply regrettable.
“While ministers are clearly wholly focused on Brexit matters and the Conservative leadership battle right now, addressing the very real problems created by the taper needs to be a priority. It is frankly bonkers that complexities in pension tax rules risk leaving patients struggling to find a doctor to help them.
“More broadly, the taper is just another hideously complicated part of our horrendously complex pension tax system. While it might only directly affect high earners it still needs to be explained to everyone, making it extremely difficult to communicate the benefits of retirement saving in a simple way.
“When the Brexit fog has cleared we hope the Government will acknowledge the current pension tax system system – with no fewer than three annual allowances as well as a lifetime allowance – is a mess and in need of simplification.
“If we can get to a pension tax regime that ordinary people can understand we can move a step closer to building genuine engagement, potentially boosting the retirement prospects of millions.”
