- Introducing a flat rate of pension tax relief or reducing pension tax-free cash entitlements risks causing ‘irreparable damage’ to the NHS, the British Medical Association has warned (BMA warns Government about Budget pension changes - BMA media centre - BMA)
- The doctors’ trade union has written to Rachel Reeves urging the chancellor not to target either of the main retirement tax perks or reintroduce the pensions lifetime allowance in her Budget next Wednesday
- This comes after AJ Bell CEO Michael Summersgill wrote to Reeves calling for a commitment to a ‘Pensions Tax Lock’ to deliver long-term stability for savers
- Under the Pensions Tax Lock proposal, the government would commit to not altering pension tax relief or reducing tax-free cash entitlements for an extended period of time – at least until the end of this Parliament
Tom Selby, director of public policy at AJ Bell, comments:
“Rumour and speculation about possible changes to pensions taxation are deeply damaging to trust in retirement saving. Furthermore, it is now clear any move to attack either of the key pensions tax perks will risk causing further disruption to the NHS, months after the government settled long-running pay disputes with staff.
“Uncertainty over what will happen to pensions tax incentives is already having real-world consequences, with increases in both contributions and the number of people accessing their retirement pots reported across the pension industry. Making long-term financial decisions based on fears about what may happen at the Budget is clearly far from ideal, and those who do this risk ending up worse-off in the long-run.
“The government has an opportunity at this Budget to end this constant uncertainty by making a firm commitment to delivering stability in the pensions tax system, rather than pursuing ill-advised reforms that would be complex, unpopular and potentially result in another round of public sector strike action.
“A Pensions Tax Lock would demonstrate this government is on the side of hard-working Brits who do the right thing and set money aside for retirement. The least people who make a long-term commitment to pensions should expect is that the goalposts won’t be under threat of being moved at every major fiscal event.”
