Outgoing pension minister Ros Altmann deserves credit for standing up to the Treasury on pension tax relief says her predecessor Steve Webb.
Earlier this year Altmann clashed with Treasury thinking by saying ‘turning pensions into Isas would be a disaster’. Speculation is growing that radical changes to pension tax relief, including a potential switch from an Exempt, Exempt, Taxed model to a Taxed, Exempt, Exempt (TEE) model, could be back on the agenda, particularly if tax receipts fall in a post-Brexit slowdown.
Altmann favours some form of tax in decumulation, as a way to nudge savers away from drawing too much too soon. Webb praised Altmann for going public with her opposition to a TEE structure. Altmann’s resignation letter to the Prime Minister called for a reform of tax relief that saw low earners get the same incentive as those earning more.
The former LibDem pensions minister, who held the role for five years, also called for the new pension minister, Penny Mordaunt MP, to prioritise auto-enrolment, work for higher contributions and tackle the crisis of low savings levels amongst the self-employed.
Webb, who is now director of policy at Royal London, also called for stability in the DWP, which prior to his tenure in office had seen more than a dozen ministers responsible for pensions since 1998.
Mordaunt is yet to comment publically on her appointment, which was confirmed by 10 Downing Street this morning.
Webb says: “Ros Altmann deserves considerable credit for standing up for workplace pensions and challenging the Treasury over its desire to scrap pension tax relief and move to a pensions Isa.
“The new minister takes over at a time when there is much to be done in the world of pensions. Millions of workers are yet to be automatically enrolled and millions more are not saving enough for their retirement. The 2017 automatic enrolment review must tackle these issues, as well as the pensions crisis affecting the self-employed. We need an end to tax relief being seen as an annual ‘piggy bank’ to be raided by cash-strapped Chancellors. And we need a coherent policy between Treasury and DWP, not least when it comes to pensions and Isas. Let us hope that the new ministerial team will have a long tenure and that we will not see a return to the revolving ministerial door that we have seen in the past.”