Pension secretary doesn’t expect to see change in tax relief
Newly appointed Secretary of State for Work and Pensions, David Gauke, spoke at the Association of British Insurers long-term savings conference yesterday.
When asked whether there would be any change to pension tax relief, Gauke said: “The idea of reforming tax relief was somewhat daunting in last parliament. I don’t expect to see any fundamental change.”
The question came as a change to pension tax relief wasn’t included in the Conservative manifesto but it was widely believed that changes would be made to the relief given to pension contributions.
Former pensions minister, Steve Webb, said given the fact that the Tories gained a small majority in the General Election, it meant a big shake-up of tax relief was “very unlikely”.
He said: “Changes like the introduction of a flat rate of relief are probably off the table. Instead, we are likely to see more ‘salami-slicing’ of limits, with a cut to the Annual Allowance particularly likely”.
Kate Smith, head of pensions at Aegon said: “We welcome David Gauke’s comments regarding a period of stability for pensions tax relief. We hope this also means an end to the constant tinkering with the pension tax rules we’ve seen over the last 10 years. Hopefully this puts an end to speculation about imminent reform which has been unsettling for those saving into a pension.
“Any change could have been politically contentious and difficult to see through. There are a number of issues that deserve more immediate attention such as legislation to tackle pension scams and the development of a cross party consensus on how to tackle the rising cost of social care.”
A recent House of Commons Briefing Paper estimated the cost of pension tax relief for the government was £21.2bn (£34.2bn in annual tax relief, less £13 bn paid by pensioners). The cost of the tax relief for ISAs in 2015-16 was around £2.6bn.