Personal Pension  

Cox – Labour tax cap plan is ‘madness’

In response to Labour Party proposals to cap pension tax relief to fund a £1bn jobs scheme, Mr Cox, head of advice for Bristol-based Hargreaves Lansdown, said pension pots should not be used for political gain.

“The definition of madness is said to be doing the same thing over and over and expecting different results,” he said.

“This is a bad idea for pensions when stability in the pension system is essential during this time of auto enrolment.”

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The Labour Party has proposed capping pension tax relief at 20 per cent for those earning more than £150,000 to fund the scheme.

According to Shadow chancellor Ed Balls, pictured, the move would recycle £1bn in lost revenue from the top earners to the 129,400 adults aged over 24 who have been out of work for more than 24 months.

Mr Cox added: “This proposal is reminiscent of the tax relief cap introduced by Labour in April 2009 to take effect in April 2011. Alongside this announcement was the introduction of the highly complicated, unwieldy and unpopular anti-forestalling rules to cover the intervening period.”

He suggested it would be more simple and transparent to increase to the highest rate of income tax.

Mr Cox’s comments were backed by Mark Wood, the recently appointed chief executive of national corporate advisory firm JLT Benefit Solutions.

Mr Wood said: “The arithmetic is flawed.

“The chancellor’s autumn statement changes mean many at the top of the earnings tree will be restructuring their approach to saving.

“Consequently, the money Mr Balls is targeting will have already gone. He’s been accused of double counting; actually, he’s counting revenues which are no longer there.”