The Government’s “nanny state rules” on pensions are driving people abroad at a cost of over £14bn a year to the UK economy, claims Standard Life head of pensions policy John Lawson.
Figures from the Department for Work and Pensions show that 1.04 million people are being paid their state pensions abroad. Lawson says this equates to a total of £91m a week or £4.73bn a year.
DWP statistics show that non-pension income for the top 20 per cent of retirees is an average of £276 per week and £75 for the next 20 per cent, making an average income of £175.5 a week, a total of £9.48bn a year with at least £2.09m taxable.
Lawson claims this all equates to a drain on the UK economy of £14.21bn a year and a tax loss of £3.13bn.
A Treasury spokesman says a person only has to be UK-domiciled to pay taxes on pension income to the UK.
But Lawson says that tax is only payable on pension income for UK residents. For non-residency, a person needs to declare that they are emigrating and not spend more than 91 days a year in this country.
He says: “The Government is worried about losing tax money abroad. It needs to make the UK a more attractive place to save by removing age restrictions on annuitisation and drawdown, for example. These nanny state rules can be the final straw that breaks the camel’s back.”
A Treasury spokesman says: “If these people were really upset about the UK pension system they would not have saved into it all their lives. There are lots of people coming into the UK and paying tax here.”