Liberal Democrat manifesto proposes single rate of tax relief set above 20%
Party also commits to maintaining the state pension ‘triple-lock’ for the next Parliament
Pressure now on Conservatives to match pledge to pensioners
Tom Selby, senior analyst at AJ Bell, comments:
“Any reforms to pension tax relief must be focused on encouraging people to save more, not boosting the Government coffers. Undersaving for retirement is one of the biggest challenges facing society today, so any change to the pension system must be focused on addressing that issue and not just be another excuse to further erode incentives to save via pensions.
“If there is to be reform to pension tax relief, it should be done in a measured way and agreed cross-party. An independent review of pension tax incentives would help foster this consensus, and all parties should commit to not tinkering with the system once any changes have been introduced. The last thing we want is huge reform programme to be introduced by one Government, only to be torn apart by its successor.
“The triple-lock is an odd mechanism for increasing the state pension and is difficult to justify given the stagnation of average incomes for younger people. The next Government should instead set out what it believes the state pension should be worth and articulate a plan to achieve that level. This would be simpler and clearer than the current policy, which ratchets the payment up at random based on the prevailing economic circumstances.”