George Osborne warned that millions of middle-class savers will lose out under plans for a pensions Isa which will be unveiled in his Budget next month.
(AtW's comment - he should warned this before the election
)
Middle-class savers are to lose thousands of pounds of tax relief when saving for a pension but will not have to pay tax when they retire, under radical plans set to be unveiled in the Budget.
The controversial proposal will mean that higher-rate taxpayers will lose valuable tax perks during their working lives. However, they will be able to withdraw their lifetime savings tax-free after retirement.
The proposal has sparked a Government row with the pensions minister warning that it threatens to undermine the system by removing the tax incentives for pensioners to keep money in their pot. It would allow George Osborne, the Chancellor, to save more than £10 billion annually in the coming years – although tax receipts would then fall in decades to come. (AtW's comment: so there you have it - he is NOT fixing roof proper, he is just using some cellotape to claim success - a cowboy chancellor)
The Chancellor is preparing to announce “pensions Isas” in his Budget later this month. The system would allow people to remove as much as they wish from their retirement pots tax free but would also remove tax relief on any funds paid into the pot.
Savers would instead receive a “bonus” worth up to 20 per cent of the money they invest in their pensions.
Last night, analysis for The Daily Telegraph showed that higher rate taxpayers will lose up to 15 per cent of their retirement income under the plans.
Savers would lose out because the loss of 40 per cent tax relief would outweigh the benefit of tax free withdrawals after age 55 as many would only be paying a basic rate of tax on withdrawals under the current system.
The analysis found that a higher rate taxpayer who has built up a pension pot worth £500,000 after tax under the current system would lose £76,000 under the proposals. Alan Higham, founder of consumer website pensionschamp.com who conducted the research, said: “This is a massively high risk strategy and risks killing off voluntary workplace pensions all together.
“We’ve already seen a lot of big bosses opting out of pensions because it’s not tax efficient, and we’ll likely see this kind of activity en masse with the implementation of a pension Isa system.”
Steve Webb, the former Liberal Democrat pensions minister, told The Daily Telegraph that the plans for a “pensions Isa” could drag more than 500,000 people into the higher rate of income tax overnight.
He said that at present pension contributions are “tax deductible” and do not count towards people’s annual earnings. He suggested the reforms would see people’s taxable income “soar”.
More DOOM from the source: Millions of middle-class savers could lose out under radical pensions shake up - Telegraph
I guess that means that pensioners in 20 years won't be voting Tory Scum at all
Apart from those who will become known as waldorks...
(AtW's comment - he should warned this before the election
)Middle-class savers are to lose thousands of pounds of tax relief when saving for a pension but will not have to pay tax when they retire, under radical plans set to be unveiled in the Budget.
The controversial proposal will mean that higher-rate taxpayers will lose valuable tax perks during their working lives. However, they will be able to withdraw their lifetime savings tax-free after retirement.
The proposal has sparked a Government row with the pensions minister warning that it threatens to undermine the system by removing the tax incentives for pensioners to keep money in their pot. It would allow George Osborne, the Chancellor, to save more than £10 billion annually in the coming years – although tax receipts would then fall in decades to come. (AtW's comment: so there you have it - he is NOT fixing roof proper, he is just using some cellotape to claim success - a cowboy chancellor)
The Chancellor is preparing to announce “pensions Isas” in his Budget later this month. The system would allow people to remove as much as they wish from their retirement pots tax free but would also remove tax relief on any funds paid into the pot.
Savers would instead receive a “bonus” worth up to 20 per cent of the money they invest in their pensions.
Last night, analysis for The Daily Telegraph showed that higher rate taxpayers will lose up to 15 per cent of their retirement income under the plans.
Savers would lose out because the loss of 40 per cent tax relief would outweigh the benefit of tax free withdrawals after age 55 as many would only be paying a basic rate of tax on withdrawals under the current system.
The analysis found that a higher rate taxpayer who has built up a pension pot worth £500,000 after tax under the current system would lose £76,000 under the proposals. Alan Higham, founder of consumer website pensionschamp.com who conducted the research, said: “This is a massively high risk strategy and risks killing off voluntary workplace pensions all together.
“We’ve already seen a lot of big bosses opting out of pensions because it’s not tax efficient, and we’ll likely see this kind of activity en masse with the implementation of a pension Isa system.”
Steve Webb, the former Liberal Democrat pensions minister, told The Daily Telegraph that the plans for a “pensions Isa” could drag more than 500,000 people into the higher rate of income tax overnight.
He said that at present pension contributions are “tax deductible” and do not count towards people’s annual earnings. He suggested the reforms would see people’s taxable income “soar”.
More DOOM from the source: Millions of middle-class savers could lose out under radical pensions shake up - Telegraph
I guess that means that pensioners in 20 years won't be voting Tory Scum at all
Apart from those who will become known as waldorks...
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