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Bad Labour joke on savings

It really is incredible that not only have the Tories taken until now to articulate calls for the scrapping of compulsory purchase annuities but that their proposals appear to be so woolly and muddled.

Over two years ago, I proposed a pensioner income bond from which the owner/s would be allowed to draw an income geared to last until the age of 100 based on an assumed rate of investment growth, with any unspent funds being allowed to pass intact to the next generation, still as a pension fund.

If the Treasury was still determined to have its bite of the cake (as well as taxing the income prior to death), a reduced IHT charge could be levied at the time of transition. Perhaps half the normal rate.

But no. Ed Balls appears to regard any such concessions as effectively sanctioning tax avoidance. So, rather than encouraging people to put money into a personal pension by addressing the two biggest objections to them, the Government remains determined to tax dividend income, tax pensions and tax unspent funds on death. Great.

This is the Government’s idea of promoting retirement savings? More like a very bad joke at everyone else’s expense, literally, of course, because the rest of us fund those copper-bottomed, index-linked final-salary (and often enhanced) civil service pensions.

How can the Government be so appallingly inept and out of touch with what is really required? Bring back waiver of premium cover. Define a flat rate of maxi-mum input relative to uncapped taxable earnings, uniform for all ages. Allow one year’s carryback. Stop taxing dividend income within pension funds. Scrap the lifetime maximum fund limit. Abolish IHT on unspent retirement funds. Remove annuity rates from the retirement income equation. Maybe cap tax relief on contributions at 30 per cent. It is all so simple that a class of 10-year-olds could figure out how to put it all together.

How did it ever get this bad and how can the Government be so wilfully determined not to listen to anything anybody else says, except, it seems, to fringe religious groups such as the Plymouth Brethren? Madness.

Julian Stevens
WDS IFAs
Bristol

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