Former Labour shadow pensions minister Gregg McClymont has criticised the party’s plans to cut tax relief for higher earners, branding the reforms “complicated” and warning they could disenfranchise bosses.
Labour’s proposed reforms to pensions tax relief, first set out in 2009, would see relief tapered from 45p to 20p for those earning above £150,000. The plans remain party policy in the run up to the election despite being roundly condemned by think-tanks, advisers and the wider pensions industry.
Speaking to Money Marketing McClymont, who lost his seat in the general election, says: “I always had a more nuanced view on tax relief than some people inside and outside of my own party.
“If workplace pensions are to remain a central pillar of our pensions system, then you have to ensure pensions remain attractive to upper management who make the decisions about the structure of the workforce pensions system. Otherwise you will end up with de minimis contributions.”
On Labour’s proposed reforms to tax relief, McClymont says: “I wasn’t mad about the top rate to basic rate going from 45p to 20p, but that was a response to a Budget when we had to give an explanation of how we would continue to fund tax credits.
“It is understandable that the pensions industry didn’t like that policy because it increases the complexity of the system. I can see why the Treasury wanted to do that, but I had a lot of sympathy with the industry saying this was going to make things a lot more complicated and difficult.”
The full interview with Gregg McClymont will be published in the 18 June edition of Money Marketing