The government are drawing up plans to raid pensions, in order to pay for Covid.
Three reforms are being considered
- Slashing the £1M lifetime allowance to £800K
- Bringing in a single tax relief rate
- Taxing employer contributions
Nigel Green, chief executive and founder of deVere Group, warns that savers to should take action now to offset the raid.
He is quoted by London Loves Business:
“Successive governments have a long history of seeing pensions as easy targets when they need to bolster their coffers.
I would suggest that if this option of slashing the pensions lifetime allowance has been leaked in advance to the media, there’s a very good chance that it will happen.
This reported move by the Treasury would be a stinging, stealthy raid on pension savings.
It would be a slap in the face for those who have worked hard and saved hard, prudently putting money aside in order to be able to enjoy their retirement with loved ones.”There’s a much, much bigger cohort of people who should be taking action now to mitigate the financial hit of the possible slashing of the lifetime allowance.
It’s not just those who already have a pension over £1m. Others need to look ahead and assess if future contributions and investment growth could drag them into a position in which they’ll be above the threshold.
But many savers are simply unaware of the impact of these reported moves by the Treasury on their retirement income.
There are various measures that can be put in place to avoid the LTA reduction fallout.
This move would serve as a disincentive to save as much as possible for retirement– and therefore it could be harmful to Britain’s long-term economic success,” affirms Mr Green.
I believe the reports on the potential plunder of pensions have merit. The pandemic has provided the government with a reason to do so.
Many more people than you might think would be affected by such a move.
There are steps to be taken to mitigate the hit. I would suggest people seek advice sooner rather than later.”
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