Playing pensions politics

by | Apr 20, 2023 | Pension History

On 6 April 2006, a new pensions tax regime came into force introduced by the then Labour government. ‘A -day’ created a single framework to replace the eight different regimes which had previously applied.  Key features were the new Lifetime and Annual Allowances, set at £1.5 million and £225,000 respectively.

A Conservative government sharply reduced these limits: in the self-proclaimed age of austerity, previous limits were perceived as too generous. The abrupt change played havoc with the pension planning of the self-employed in particular, since higher allowances nearer retirement had long allowed them to make up for years when pensions had to take a back seat to investment in their business.

Amid the political noise surrounding the increased limits announced in the recent Budget the real lesson is lost. Hospital consultants are not the only public sector employees affected. It is not only the public sector where it matters. All deserve a stable and predictable taxation system so that they can plan their retirement. Moreover, public discourse would be greatly improved if the cost of a comfortable retirement was properly understood and acknowledged.

As George Ross Goobey said in a speech back in 1978 ‘Whenever I board an aeroplane, I thank God that the pilot is an expert at his job and has not been chosen by a democratic process laid down by a Government White Paper.’

Of course, experts are not always right either…

Pensions Archive Trust Director, Jane Marshall

This article was first published in the April 2023 edition of Pensions Age magazine.