17 Feb, 2016
Osborne could slash pensions by £4,000 a year
Rumours are awash that UK Chancellor George Osborne is set to cost state pension contributors by up to £4,000 a year, due to potential changes to the 1921 Finance Act.
This Act enables people to put aside money for their retirement tax-free, no matter how much they earn, although this could be coming to an end. Mr Osborne announces the Budget next month and it has been rumoured that this tax-relief legislation is under scrutiny after a Treasury document was revealed with the title: “Strengthening the incentive to save: a consultation on pensions tax relief”.
If Mr Osborne does scrap the tax-reliefs, it would impact an estimated 4 million people in the UK who are banking on the state pension to fund their lives once their working days are over. deVere Group can report that the most unfortunate savers would lose out by more than £4,000 a year, instead having to replace that amount themselves to sustain their retirement.
The brutal changes will force people to either work longer, potentially into their 70’s, or scrape together more savings per month in order to foot the bill.
There has been immediate criticism thrown in the direction of the Chancellor due to the rumours, including comments from senior Conservative MP’s. Furthermore, Mark Garnier, part of the Treasury select committee, branded the plans as a “a war of attrition on higher earners”, whilst Tom McPhail, head of retirement at Hargreaves Lansdown, commented that the changes could bring “disastrous consequences in the years to come”.
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