Labour has attacked Chancellor George Osborne’s “shambolic” handling of the abolition of the 55 per cent pensions “death tax”.
Osborne chose to make the reform, which was due to be revealed in the Autumn Statement in December, the centrepiece of his Conservative Party conference speech last week.
The initial Treasury announcement, and pre-briefings to the national press and sections of the industry, explicitly said annuities and scheme pension would be excluded from the reforms. However, Money Marketing subsequently revealed people with value-protected annuities will in fact be able to take advantage of the tax cut.
The share prices of a number of specialist annuity providers, including Just Retirement, slumped on the back of the partial announcement before rebounding as details of the reforms emerged.
Speaking to Money Marketing, Labour shadow financial secretary Cathy Jamieson says: “In keeping with most of the other announcements at the Tory Conference, George Osborne’s announcement of the abolition of the 55 per cent tax on pension funds at death was rushed and shambolic.
“The Treasury initially said the changes will not apply to annuities; now it turns out that they will apply to some annuities.
“This error led to confusion in the equity markets and a slump in the share prices of some annuity providers.
“This is not an isolated incident – Government pronouncements on pension reform have been riddled with confusion and error. First, George Osborne said people would receive advice. Then it turned out he meant guidance. Then we were told the guidance would be face-to-face. Then we were told it might not be. And we still don’t know enough about what the guidance will look like in practice.
“These reforms will have huge implications for savers and it is vital the Government gets them right. That is why Labour set out three clear tests to judge them by – advice, fairness and cost. At the moment, the Government is failing on every level.”
It is not the first time the Chancellor has been caught up in a botched policy announcement. In April, Osborne wrote to FCA chairman John Griffith-Jones saying he was “profoundly concerned” a pre-briefing of information about a review of closed-book providers had caused “considerable disruption in the trading of insurance shares”.