- Current government scrapped the lifetime allowance (LTA) with a surprise announcement at the 2023 Spring Budget
- Labour had previously pledged to reverse this policy and bring back the LTA
- AJ Bell has campaigned for simplicity in pensions and its manifesto for saving and investing last week argued against reinstating the LTA
- Labour has dropped the proposals, recognising the uncertainty it could create for pension savers now and in the future
Tom Selby, AJ Bell director of public policy, says:
“The decision to scrap the pensions lifetime allowance for good in April this year was both necessary and sensible. Labour therefore deserves credit for recognising this and dropping plans to reintroduce the limit, a move which would have risked hitting senior public servants, including doctors, with huge tax bills, added unwelcome complexity to the pensions tax system and unfairly penalised those who enjoy strong investment growth.
“Labour’s commitment to stability should give savers confidence to plan for the future. This move also supports wider efforts to boost investing, including in UK companies. Any pension tax reform taken forward by the next government should focus squarely on simplification and encouraging more people to save for the long term.”
AJ Bell’s saving and investing manifesto
AJ Bell last week called for a focus on keeping pensions and ISAs simple among its five key priorities for the next government (AJ Bell savings and investing manifesto):
- Ditch the British ISA and focus on ISA simplification
- Keep pensions simple with no return to the LTA and resisting changing pension tax relief
- Improve help available to savers and investors through the Advice Guidance Boundary Review
- Connect people with misplaced pensions by getting pensions dashboards off the ground
- Address issues in the tax system, including overtaxation on pension income and long waiting times to speak to HMRC
