Struggle’s pension policy could hurt savers
The left-wing party led by Jeremy Corbyn has pledged to make coin money income duty for workers earning more than £80,000 a year, if it wins next month’s resident vote.
However, this is set to have big implications on pension saving.
This is because tax aid is based on income tax rates.
Under the current system, people are heartened to save for retirement with tax relief on contributions – higher rate taxpayers, profit from higher tax relief.
It means that under Mr Corbyn and comrade chancellor John McDonnell’s current plans, tax relief for higher earners wish actually increase.
To combat this, the party may bring down the total amount that anyone outstanding £80,000 a year can save into pensions.
It could also provoke the party to completely reform the system.
It comes after some human being have clued for a flat-rate of pension tax relief, which would hit millions of mid-point income workers earning more than £45,000 a year.
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Tom McPhail, entirely of policy at pension provider Hargreaves Lansdown, said: “Given the ideological bents of this Labour party, it is hard to see them being relaxed upon actually increasing pension tax relief for higher earners.
“This means we’d be likely to see the Annual Remuneration Taper Threshold brought down to £80,000, a move which liking be met with horror by employers and the pensions industry alike.
“It isn’t clear at the prominence whether Labour have thought this aspect through or what they contemplate to do about it but we should expect a further announcement on this from them.
“This argue also illustrates one of the myriad problems caused by the current pension tax assuagement system.
“Whoever forms the next government, they have to get a approach on pension taxation and look at a fundamental reform of the system.”