Labour slammed over new pension rules which threaten 'instability'

Labour slammed over new pension rules which threaten 'instability'
-Credit: (Image: Reach Publishing Services Limited)


Chancellor Rachel Reeves is coming under fire for proposed changes to pensions under the Labour Party government. Ahead of Ms Reeves' Budget on October 30, Labour has ruled out raising income tax, VAT and corporation tax - but not pensions.

Legal & General boss Antonio Simoes has called on "more of the assets that are in the pension schemes to work harder for the UK economy". He said: "What's important is stability. We need people to be investing more for their retirement - and if you keep on changing the incentives, there's no stability.

"It's important individuals are incentivised to lock their money away [and] that we create pools of long-term savings that can be invested in energy and other areas." Simoes added: "We want to see stability and we want to encourage long-term savings and productive finance.

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"We want more of this money to then be invested in the real economy." He said his firm was "very supportive" of stability and "incentives for people to do that". One way of plugging the so-called "£22billion black hole" would be to slash the level of tax relief on pension contributions for higher-rate tax-payers.

Steven Cameron from the wealth manager Aegon, warns that the Government is facing calls to reduce the relief for those with the biggest pension pots. "There is a possibility that the budget could either cap the tax-free lump sum at a much lower amount or reduce the proportion you can take to, say, 20 per cent. Both would increase the tax take," he told The Times.

""To generate extra income tax, these changes would have to apply to pots already built up over years or decades," Mr Cameron added. "This would be highly controversial, reducing one of the most valued tax incentives that pension savers look forward to."

He said: "If you were planning to take your tax-free lump sum soon anyway, it may be worth considering taking it before the budget. But taking money out of your pension before you need it is generally not a good idea because you will lose other tax benefits."