Tory pension changes would leave a packed Wembley empty-handed reveals new Labour analysis

Sunday, 19 March 2023 00:01

Labour analysis of the government’s pensions giveaway for the one per cent reveals that just 11 people out of every 90,000 will benefit: the equivalent of one football team... Labour has committed to reversing the changes to the pensions lifetime allowance announced in this week’s Budget, calling them “the wrong priority at the wrong time for the wrong people”. The scrapping of the pensions lifetime allowance in the Budget would have meant that in 2020-1, only 0.01%...Request free trial

Labour analysis of the government’s pensions giveaway for the one per cent reveals that just 11 people out of every 90,000 will benefit: the equivalent of one football team...

Labour has committed to reversing the changes to the pensions lifetime allowance announced in this week’s Budget, calling them “the wrong priority at the wrong time for the wrong people”.

The scrapping of the pensions lifetime allowance in the Budget would have meant that in 2020-1, only 0.01% of the population would have benefitted from the massive tax break for their retirement.

Shadow Chief Secretary to the Treasury Pat McFadden said the “vast majority of pension holders won’t benefit from the Government’s proposals” and urged the government to rethink their decision.

The Chancellor’s largesse was announced just minutes before grim new figures from the Office for Budget Responsibility showed that the real disposable income of average UK households has fallen by £1,500 since the start of the pandemic.

Jeremy Hunt’s handouts will also mean that people with more than £1.4 million in their pension pot are able to pay up to £150,000 less in tax. It comes as basic rate taxpayers face an extra £650 in tax next year, and the country’s overall tax burden was projected upwards yet again.

Paul Johnson at the IFS poured cold water on the government’s claim it would get people back into work, saying “won’t play a big part, if any, in increasing the number of people in work.

The lifetime allowance measure alone will cost the taxpayer more than £70,000 for every person forecast to return to the labour market as a result of the policy.

Pat McFadden MP, Labour’s Shadow Chief Secretary to the Treasury, said

“In the run up to the Budget, Labour called on the Government to deal with the pension problems facing doctors. Indeed, we were attacked for doing so by the Conservatives who said such a proposal was unaffordable.

“The vast majority of pension won’t benefit from the Government’s proposals because they will never get near a pension pot of more than £1 million.

“The Government should rethink this giveaway and instead focus on a scheme to deal with the early retirement problems facing the NHS.”

Ends

Notes:

In 2020-1, 8600 people incurred charges due to the pensions lifetime allowance. (https://ifs.org.uk/sites/default/files/2023-02/A-blueprint-for-a-better-tax-treatment-of-pensions.pdf)
The lifetime allowance has now been abolished. They 8600 people only represent 0.01% of people, this is equivalent to 90,000 people, only 11 people would have benefitted.
This is the equivalent of one football team, none of the 90,000 spectators.

Paul Johnson said the changes “won’t play a big part, if any, in increasing the number of people in work.” (https://ifs.org.uk/sites/default/files/2023-03/Opening-remarks-by-Paul-Johnson.pdf)