![]() Lifting the cap means savers can contribute to their pension – and benefit from government tax relief – indefinitely without incurring a penalty. Ministers are concerned because the UK is the only major country where economic inactivity - the number of people aged between 18 and 65 who are not in work - is higher than before the pandemic. In Wednesday's Budget, Mr Hunt announced that the lifetime cap on pension savings would be abolished from April 2024, under Conservative reforms designed to encourage more over-50s to return to the workforce. “I do believe that Labour is trying to play the class war on this issue, when in reality the policy is aimed at trying to ensure that we retain good people within the workforce,” he said. “ We need people to return to work but they are not going to do so if they are penalised in this way.”Īnd John Baron, a Tory member of the Treasury select committee, said Labour is promoting “class war” by penalising the well-paid. “Labour is saying that people should come back to work but not be able to add to their pension. They have taken the bait and not thought this through. Sir Iain Duncan Smith, the former work and pensions secretary, said: “This is a mistake by Labour. The uncertainty has also thrown the financial industry into chaos, with pension advisers reportedly inundated with calls from savers already looking for ways to protect their nest eggs from the risk of a Labour government. Rachel Reeves, the shadow chancellor, announced that the party would reverse Mr Hunt’s decision to scrap the cap on the amount people are allowed to put into their pensions before being taxed.īut analysis showed that in two years’ time - by which point Labour could have won a general election - two million people could face paying taxes of up to 55 per cent on their pots as a result of Ms Reeves’ policy.įormer pension ministers lined up to criticise Labour, saying the announcement could encourage people to “panic-buy” pensions for the next two years before taking early retirement if Labour wins the election. Jeremy Hunt’s back-to-work drive is under threat as Labour prepares for a tax raid on up to two million pension pots.
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