PensionsNov 6 2015

Osborne to hold fire on pension tax changes

Search supported by
Osborne to hold fire on pension tax changes

The results of the government’s consultation into the taxation of pension savings will be announced in next year’s Budget, George Osborne has said.

The chancellor made the comments while responding to a question in the House of Commons from Conservative MP Richard Graham, the chairman of the all-party parliamentary group for pensions.

Mr Osborne said: “My honourable friend is right to say that we have taken significant steps to encourage saving, not least by giving pensioners control over their pension pots in retirement and by trusting those who have saved all their lives with the money that they have earned and put aside.

“We are open to consultation on the pensions taxation system at the moment.

“It is a completely open consultation and a genuine Green Paper, and we are receiving a lot of interesting suggestions on potential reform. We will respond to that consultation fully in the Budget.”

HM Treasury’s consultation - called Strengthening the incentive to save: a consultation on pensions tax relief - finished at the end of September.

It was announced in the Summer Budget when the Treasury said it wanted to make the pension tax system more simple and transparent.

Among the possible changes Mr Osborne has floated is the move to a system which is taxed exempt exempt like Isas.

But the Treasury has said change could be less radical and involve altering the lifetime or annual allowance. Mr Osborne said: “Our goal is clear: we want to move from an economy built on debt to an economy built on the more secure and productive foundations of saving and long term investment.

Adviser view

Tom McPhail, head of retirement policy at Bristol-based Hargreaves Lansdown, said: “The government’s decision not to respond to its consultation until next year is a reflection of the complexity of the pension tax system and the challenge in introducing any reforms.

“We welcome the fact that it is taking a measured approach rather than rushing at the problem.”