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Rachel Reeves will announce a stealth tax raid on retirement savings, a move experts said would reduce take-home pay and cut the size of pension pots
The chancellor is expected to use the budget to limit a tax break on pension contributions for both employers and employees to raise up to £2 billion a year
Reeves has decided not to cut pension lump-sum withdrawals due to concerns about the impact on pensioners. It means people who retire will be able to continue making tax-free drawdown payments worth 25 per cent of a total pension pot up to a maximum of £268,275
The chancellor will instead target salary sacrifice schemes as she attempts to fill a gap in the public finances of up to £30 billion
Reeves is expected to use the budget to cap the amount of someone’s salary that can be sacrificed without incurring national insurance payments at £2,000 a year
Any pension contributions over that level would result in an employee paying the full rate of national insurance of 8 per cent on a salary of less than £50,000 and 2 per cent on income above that
There are concerns that the crackdown will penalise people for “trying to do the right thing” and save for their retirement as well as being detrimental to company pension schemes
thetimes.com/article/2f1a32…
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