Osborne's planned pension tax will hit low and medium paid workers and could lead to a mass exodus from pension schemes unless properly designed says GMB.
Millions of people in defined benefit schemes like gas workers, teachers, rail workers, police and nurses could see their pension contributions taxed by this proposal unless the proposal is designed properly says GMB
GMB commented on reports that in the spending review (Dec 5th) that the Chancellor intends to raise revenue by reducing the tax-free limits for pension contributions; namely reducing the tax-free allowance for contributions to £30,000 per annum.
Brian Strutton, GMB National Secretary for Public Services, said “This proposal is presented as only affecting the very highly paid i.e. those who can afford to pay that much a year into their pension.
However unless the proposal is carefully designed this may not be true. So this proposal to further tax pension saving should be looked at very carefully.
Millions of people in defined benefit schemes like gas workers, teachers, rail workers, police and nurses could see their pension contributions taxed by this proposal unless the proposal is designed properly.
Because of the way this allowance is calculated virtually anyone who has been saving into a good quality defined benefit pension scheme could get caught. It is a tax on the rich but it will also hit many others unless pension’s savings for workers on or just above average wages in defined benefit scheme are excluded.
So unless it is properly designed it is absolutely not just a tax on the highest paid and the consequences should be properly explained and analysed before decisions are taken. Otherwise we could see many people surprised by higher tax bills and consequently deciding to pull out of their pension scheme. This would be a disaster for those schemes and would not yield the tax returns the chancellor might be hoping for. I hope he looks into all the ramifications so that he avoids damaging pension funds”
Contact: Brian Strutton, GMB National Secretary on 07860 606 137 or Naomi Cooke GMB National Pensions Office on 07739 919633 or GMB Press Office: 07921 289880 or 07974 258123.