The Chancellor plans to bring forward proposed cuts to pensions tax relief could have come to a standstill after advisers threaten to begin a ‘political storm’ if changes affect the current system.
George Osborne is currently exploring options to scrap the current tax breaks as well as offer pensioners no relief while paying into their pension but instead giving tax-free access to savings once the individual has retired.
It’s expected the chancellor would delay these changes until the next Budget, which will be in March next year. Although, after proposed cuts to tax credits following the House of Lords’ rebellion, many people have raised concerns that Osborne could bring forward pensions cuts in an attempt to plug the deficit.
Phil Loney, Royal London chief executive, told the Telegraph:
“We’re just enrolling millions of people in the workplace into their pension schemes and it would be a huge turn-off for them if they have to trust that, 30 or 40 years from now, some politician who’s probably still in their nappies right now is going to allow them to take that money out free of tax. That’s a big ask,”
“If he really did choose to scrap tax relief on pensions and move to a different regime, I think he might find himself with the same kind of storm that he’s got around tax credits. It’s that big an issue,” he further commented.
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