1939: In Name Only – John Cromwell
We are gradually counting down to 29th November, when George Osbourne presents his Autumn Statement. There has been much debate in the press about whether he will abolish or reduce the amount of tax free cash available from pensions – currently 25% of the fund. A cynic might say that the change in terminology brought in by the previous Government might aid this cause.
Pensions no longer have a retirement date. The current and previous Governments have made this possible through the abolition of the compulsion to buy an annuity – even though in practice, most will still do so. You no longer retire – you crystallise benefits. Yes you did read that correctly, at least they didn’t call it “fossilize”.
The new jargon for the tax free lump sum is “Pension Commencement Lump Sum” PCLS… which leaves open the door for having no reference to tax free.
In his bid to cut costs, Mr Osbourne and the Treasury are also rumoured to be considering reducing or scrapping higher rate tax relief on pensions. In theory this could be worth £10,000 a year to someone using the £50,000 annual allowance. This sort of rumour has been around for as long as I can remember and one has to be a little suspicious of the financial services industry, who invariably use rumour of change to encourage people to take pre-emptive action.
Pensions have already had far too much change. These sort of changes would be entirely counter productive to encouraging the population to save for retirement and independence of the State. So should anyone with any input into the Treasury be reading this. Please don’t mess things up further!
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