The Government’s lack of a majority means plans for a fundamental reform of pensions tax relief are on hold for the foreseeable future, Work and Pensions Secretary David Gauke MP told an ABI conference today.
Gauke, who was both chief secretary and financial secretary to the Treasury under then Chancellor George Osborne, said the lack of consensus on the issue in the previous Parliament had held back reforms then, adding that the weakness of the current administration, which does not have a parliamentary majority, meant reform to tax relief was even less likely.
He said reforms to the pension landscape were only likely to get through Parliament now if there was consensus on both sides of the House of Commons.
Gauke reasserted the Government’s intention to create an auto-enrolment-style solution for the self-employed, adding that while the challenge may seem a big one, the success of auto-enrolment for employees had shown that the industry and other stakeholders were capable of overcoming considerable obstacles.
Gauke said: “I am not going to shy away from the fact that getting things through the House of Commons at the moment, where we don’t have a majority, will be challenging. But that will give us the opportunity to try to build consensus. This is not going to be a period of rushing legislation through, going from announcement to legislation in a short period of time.
“I worked very closely on tax relief in one of my previous roles. The point that the then Chancellor made was that there would be a consensus required as to how to reform pension tax relief, and I can’t say that anything has changed. The idea in the Previous parliament was somewhat daunting. I don’t think that recent events have changed that in any way. They will continue to be a debate on this issue but I do not see a particular consensus emerging and so wouldn’t expect to see fundamental changes in the future.”
Old Mutual Wealth head of retirement policy Jon Greer says: “For a couple of years there has been a cloud of uncertainty hanging over the future of pension tax relief after the government consulted on reforms, which may have dramatically curbed the pension perks available for higher rate taxpayers. With recent figures showing the level of saving at a record low, now may not be the time for an overhaul of the pension tax relief system.”