Minister Clues That Pensions Raid Is Still A Go
Chancellor George Osborne’s plan to use a flat-rate tax relief rate in replacement for higher-rate tax relief is still a go according to clues observers noted from Financial Secretary to the Treasury David Gauke. The minister said that pensions tax relief should be ‘targeted in the right direction’.
In preparation for the coming pensions raid, millions of middle-class savers might re-plan their retirement, preferring ISAs or other investment funds that have better tax relief or profits. According to ministers, the current system is not “affordable in the long term.”
The ministers intend to use a radical review led by Sir John Cridland, the former head of the Low Pay Commission, which would shed light whether the current pensions system is indeed as ministers claim it to be.
The Office for Budget Responsibility forecasts that the pension age has to reach 69 by the 2040 before it increases to 70 by the early 2060s. This would mean Generation X and Y savers would have to save up for an extra year before they receive their retirement benefits free of taxes.
A Briton who leaves school and starts employment at 16 can earn retirement earlier than college graduates, who delay their entry to the jobs market until after their degrees. Further pension forecasts suggest truth on this observation.
According to Liberal Democrat Leader Tim Farron, the review would only open doors to increase the State Pension Age further and abandoning the initial idea that State Pension Age should rise in line with a person’s life expectancy.