View more on these topics

Lib Dems target pensioners’ tax-free lump sums

Nick Clegg LibDem Rally 2012 Sep 480

The Liberal Democrats are targeting cuts to tax-free lump sums withdrawn from pension pots on retirement as part of a further raid on pension tax relief.

In a taxation policy consultation published ahead of its spring conference in March, the Lib Dems argue that the current tax-free lump sum allowance of 25 per cent could be reduced.

The paper states: “An option could be to change the limit for the lump sum that may be taken tax free from a person’s pension pot on retirement. Currently, a taxpayer may take 25 per cent of their pension pot as a tax free lump sum withdrawal.

“However any change in this area needs to be carefully considered in light of the financial plans that people have already made.”

The paper also argues for further cuts to annual pension tax relief from £40,000 to £30,000, despite being cut from £50,000 in the autumn statement in December. The Lib Dems also want to see the lifetime allowance cut back to £1m from £1.25m after being cut from £1.5m in December.

The paper states: “We are considering further reductions in the annual and lifetime allowances – perhaps to around £30,000 and £1m respectively.

“If we introduced such changes, we would propose to leave reliefs at these levels for some time, to allow a period of certainty in pension planning.”

In December, Treasury chief secretary Danny Alexander told Money Marketing there would be no more changes to relief in this parliament.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. How to kill off the pension industry in 1 step!

    Have they been taking lessons from Hector?

  2. Problem is that whilst this party will never rule alone, they will hitch a ride on the back of any party that has a hung parliament it seems! Just hope its not before I get to age 55!

  3. Do not save towards a pension. Spend it now and enjoy life.
    Anything you do save will be eaten up in care costs or targeted by the likes of clegg.

  4. “If we introduced such changes, we would propose to leave reliefs at these levels for some time, to allow a period of certainty in pension planning.”

    Leaving aside all of the other open goals in this article that could be attacked, it’s this dénouement that’s the most galling.

  5. What the Lib-Dems (Tories and Labour) will accept is that broadly speaking, the everyday person in England simply wants these politicians to get out and stay out of their lives.

    Pensions is a example where endless meddling by politicans has bought the system (in the private sector) to its knees.

    Meanwhile, we read that the pensions of part-time judges will cost the taxpayer at least £2Bn over the years to come.

    For most of us who have spent decades in the private sector, we belatedly realise that was the biggest mistake we ever made – we should have taken public sector work as the pensions apartheid is now crystal clear.

  6. So rather than come up with ideas to generate employment – and ergo tax revenue they target the pensions of those who have bothered to get off their a***s and work for a living.

    You couldnt make it up.

  7. @ Sean
    yes, they need it for the family reported in the daily mail today, who are being given a £400,000 house because there are eleven children in the family.
    had first child aged 14, never worked, just the kind of family so loved by the lib dems.

  8. Anon @ 3:38 pm above should have read:

    What the Lib-Dems (Tories and Labour) will NOT accept is that broadly speaking, the everyday person in England simply wants these politicians to get out and stay out of their lives.

    Sorry about that typo.

  9. To the voters of Eastleigh see what you get if you vote Lib Dem.

    Pensions taxed
    Homes taxed
    and a Leader who sends his kids to a top school

  10. How about we get an actuary to calculate the annual accrual and projected retirement value of Cleggy’s gold plated pension pot assuming that he manages 40 years of service retiring at age 60 and compare it to what we mere mortals can accrue under personal pension legislation. Only then will this bunch of clowns realise why we the people that fund their pension are up in arms.

Leave a comment