WORKERS could get bigger retirement pots under a “pension bonus” being
considered by George Osborne.
The Chancellor is weighing up a new flat rate for pensions tax relief that
will add up to £300 per year to average savings.
All 24million basic rate taxpayers would be better off under a “save 67p, get
33p free” plan. A “save 75p, get 25p” rate is also being considered.
The move could be unveiled in the Budget on March 6. And it has been hailed as
“the biggest boost to working people” since Margaret Thatcher’s Right to Buy
council house policy.
It would also end a major tax break for the highest paid that costs around
£28billion a year.
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Workers’ pension tax relief is currently pegged according to their income tax
bracket.
That means those on the 20 per cent basic rate pay 80p for every £1 that goes
into their pot, while higher earners pay just 60p per £1. Mr Osborne is
considering a flat rate expected to be between 25 and 33 per cent.
Figures from the Association of British Insurers show average savers putting
away £1,260 a year would be between £100 and £300 better off.
Tory MP Julian Knight, who is pushing the proposal with the Treasury, said:
“Overnight, people will see their retirement prospects transformed.”
The Treasury said Mr Osborne is “considering all options” and will make an
announcement at the Budget.