Steven Cameron Pensions Director at Aegon said: “As Boris Johnson settles into Number 10, we hope that alongside a renewed focus to resolving Brexit, he and his new cabinet will put their energies into other key policies which could make a huge difference to millions whether through boosting public services, reducing taxes or improving incentives to save for future events such as funding social care.”
Social care
“Top of our list is the pressing need to deliver the long overdue promise of a new deal on social care funding. As the House of Lords recently reported, the Government urgently needs to put the future funding of social care on a sustainable footing. Our ageing population deserves clarity on what the state will pay for and what individuals will have to fund themselves, based on their wealth.
We support Boris’ desire for cross-party consensus here. There must be an increased commitment to central Government funding to remove the current postcode lottery, and a cap on the overall amount anyone will have to pay themselves, allowing people to plan ahead and protect inheritance aspirations. For many, the key assurance they want is that under new rules they won’t have to sell the family home to pay for social care.”
Pension allowances including NHS issue
“On the pension agenda, it’s important to ensuring tax rules and retirement savings incentives are fit for the future and work together without unintended adverse consequences. Issues with highly paid health professionals in the NHS scheme have shone a light on the sheer complexity of rules around pension lifetime and annual allowances. These are penalising an increasing number of people saving for retirement, encouraging some to refuse extra work or to retire early. Now is the time to revisit these rules and not just for NHS workers.”
Income tax thresholds
“The new Prime Minister generated huge publicity when talking of major shifts in income tax thresholds including lifting the higher rate threshold from £50,000 to £80,000 but also reviewing other thresholds. While paying less income tax will be welcomed by most, there are knock-on implications for pension savers which need to be considered carefully. Individuals get a tax relief top-up from the Government at their highest marginal rate. So someone who currently pays 40% income tax but in future pays 20% will receive less of a top-up. It’s important that incentives to make provision for retirement remain strong. Note the Scottish Government sets its own thresholds which are already lower than in the rest of the UK.”
Net pay issue
“Another equally pressing pension priority is ensuring non-taxpayers in ‘net pay’ schemes receive the 20% tax relief on their pension contributions to which they are entitled. The lowest earners deserve every help they can get to save for their retirement. This issue will be even more pressing if the threshold for starting paying income tax is increased.”
Dashboards, self-employed and auto-enrolment
“We encourage the new Cabinet to recommit to and push ahead with other previously announced pensions initiatives including Pension Dashboards and improving the pension prospects of the growing army of self-employed. We also passionately hope to see continued focus on building on the success of automatic enrolment which has boosted the retirement prospects of millions of employees.”
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