Pensions minister Steve Webb has called for a flat rate of 30 per cent tax relief on pensions contributions and plans to give savers estimates on life expectancy to support the Government’s Budget reforms.
In an interview with the Daily Mail last week, Webb said he wanted to see the benefits of pension tax relief spread “much more evenly”.
He said: “Most people get 20 per cent relief, some people get it at 40 per cent. But the people who get it at 40 per cent get shed loads. If you gave everybody 30 per cent then that spreads it much more evenly. Clearly that is not government policy, it is not even LibDem policy yet – but I am working on that.”
Webb argued such a system would reduce the need for the lifetime allowance, currently set at £1.25m.
In another interview with the Daily Telegraph, Webb said the Government wants to provide savers with a rough life expectancy guide when they retire to help them make better financial decisions.
Estimates would form part of the Government’s plans to provide at-retirement guidance and would be based on factors such as gender, where someone lives and lifestyle factors such as smoking.