Jeremy Hunt defends pensions tax break
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Labour has been accused of “making it up as they go along” after vowing to reverse Jeremy Hunt’s Budget pensions tax break if the party takes power at the next general election. The Chancellor announced he is scrapping the lifetime pensions allowance in a bid to stop an estimated 15,000 high earners – including senior NHS doctors – leaving the workforce early because the current rules mean it is not worth them carrying on working.
Sir Keir Starmer’s party has pledged to reinstate the cap on the amount people are allowed to put into their pensions before being taxed and instead create a targeted scheme for doctors.
But Labour has come under fire over its plan to reverse the reforms unveiled by the Chancellor in his Budget.
Former work and pensions secretary Sir Iain Duncan Smith told the Telegraph: “This is a mistake by Labour. They have taken the bait and not thought this through.”
Baroness Altmann, a former Conservative pensions minister, said: “The Labour announcement is another classic example of dreadful political tinkering with pensions that undermines confidence time and again.
“It never made sense to punish good long-term investment performance in pensions. Having a lifetime allowance should not be needed if there is a limit on annual contributions.
“It seems nonsensical to have both, and deters some of the higher-return investments which the economy really needs.”
Andrew Jones, another ex-Conservative pensions minister, added: “Labour are just making it up as they’re going along.”
Mr Hunt used his Budget on Wednesday to abolish the £1.07 lifetime pensions allowance in a bid to boost economic growth by decreasing the number of working-age adults opting to retire.
The move is primarily aimed at preventing consultants retiring early from the under-pressure NHS.
He also increased the pensions annual tax-free allowance from £40,000 to £60,000.
Mr Hunt yesterday took a swipe at Labour for shifting their position “overnight” on the tax break.
He told Sky News: “I think if you talk to anyone in the NHS, they will say doctors leaving the workforce because of pension rules is a big problem.
“It is something, incidentally, that Labour advocated last September.
“Wes Streeting said we should get rid of the cap on pensions, the lifetime allowance.
“He seems to have changed his mind overnight on that one.
“He said it was crazy and it would save lives to get rid of that cap. Well, he was right in September when he said that.”
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