Government dismisses couples pension fund

Government dismisses couples pension fund

The government has dismissed a proposal to create a joint pension fund for couples, as it wouldn’t be consistent with the system of independent taxation.

In a written answer to Parliament, Lord Bates, international development minister, said that the current system is in place since 1990, and “provides that each individual is taxed on their personal income and has their own tax-free personal allowance, and their own set of tax thresholds”.

He added: “This fundamental principle provides everyone with absolute confidentiality for their personal tax affairs. For this reason, the government is not currently considering changing this policy.”

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He also said that individuals can make contributions of up £2,880 each year to a personal pension, self-invested personal pension, or stakeholder pension and receive basic rate income tax relief at, currently, 20 per cent or £720 on their contribution.

“Those contributions can be funded by a working partner,” he added.

Lord Bates was answering Baroness Burt of Solihull, who questioned the government’s assessment of the recommendations in the Centre for the Study of Financial Innovation (CSFI) report The Dependency Trap, published in January.

The research recommended that working partners should be able to contribute to the pension funds of non-working partners, with the recipient also benefiting from tax relief on these contributions.

Gender variations in total life-time earnings remain substantial, with men earning – on average – 80 per cent more than women. This has a knock-on effect on their respective pension prospects.

The report also concluded that raising the UK state pension age is not enough to address the challenges caused by an ageing population.

The government announced in July that the state pension age increase should be brought forward to 68 between 2037 and 2039, due to increases in life expectancy.

Under the current law, the state pension age is due to increase to 68 between 2044 and 2046.