Commenting on the announcements by Ed Miliband today, David Brooks, Technical Director at Broadstone, said:
“Labour's new Life Time Allowance policy will hit those with aspirations to a pension of more than £30,000 a year, this being the amount a £1m pension will buy. If the annual contribution limit is to be the lowest it has ever been, why have an upper limit at all? It only seeks to punish those who have saved hard already and those who want to save hard in the future.
“Is it really to be the case that those earning £149,000 pa receive 40% tax relief while those earning one thousand more get 20%? These cliff edge tax policies are never sensible, creating distortions and disincentives to progress. Witness the mess the last time Labour attempted something similar. Effectively the reduction in tax relief makes pension contributions not financially viable - is that the incentive to succeed we are looking for?
“Labour finally gives in on the concept of pensions as deferred income. By introducing a tax on pension contributions Labour is putting paid to the long cherished assertion that pensions are deferred pay and should be protected as such.”