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DWP yet to mull aged-based pension tax relief

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The Department for Work and Pensions has not conducted any research into whether a system of aged-based pension tax relief would be viable, Money Marketing has learned.

A Freedom of Information Act request from Money Marketing asked DWP for any analysis, research, cost-benefit projections or other work conducted by the department into systems where tax relief on pension contributions varies by age.

The Treasury is understood to have held discussions on such ideas, which has been promoted in recent months by the likes of Hargreaves Lansdown.

Under Hargreaves’ suggestion the government would offer £1 minus a person’s age for every £1 they pay into a pension plan, meaning that a 25-year-old would get a £75 top-up for every £100 they invested while a person aged 60 would get a £40 bonus for saving the same amount.

In its response DWP said: “DWP has not undertaken this analysis and does not hold this information. The Government published a consultation on whether to reform pension tax relief at Summer Budget 2015, and responded at Budget 2016, concluding that it was not the right time to reform.”

The DWP was also asked when it would conduct any formal analysis into aged-based pension tax relief but gave no indication of this.

Head of retirement policy at Hargreaves Lansdown Tom McPhail said: “In the longer term, further reform of pension taxation is inevitable and probably on a substantial scale. We believe the age-based approach merits further investigation.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The DWP isn’t responsible for tax relief. You may have well as asked them if they’ve looked into zoology.

  2. Daft proposal anyway

  3. A poorly thought out proposal from Highcharges Lansdown. Overly complex, ageist, and would disproportionately benefit wealthy families who can afford to save on behalf of their offspring. The majority of young people can’t afford to save much into their pension because of high property prices and low wage growth. You save more in your 40s and 50s when you are on the property ladder and have a bit more money in your pocket. This genius idea would discourage that.

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