In the Treasury select committee’s “Tax After Coronavirus” inquiry, Paul Johnson, head of the Institute for Fiscal Studies, a think- tank, said “there was a case for retirees to pay higher taxes on money drawn from occupational, or workplace, retirement plans.” explains the FT.
He went on to say, “Pension tax relief restrictions and pension tax relief have raised lots of money over the past decade..there has, of course, been no increase in the tax on pensions in payment.”
There are thousands upon thousands of retirees in receipt of pensions in payments. Many receive ‘high’ guaranteed pension payments from final salary schemes. In our research, I floated the idea of perhaps the government could raise money from pensions in payment. It now seems this is a question that has been discussed at higher levels than me!
What could it mean? Resentment. Anyone who feels they have been unfairly treated, whether it’s a £1 or £100K..the numbers don’t matter, it is the perception of fairness. Of course, its an emotional response and I would say perfectly normal. Yet from a logical perspective, it could happen. Perhaps not in November, (who knows) but what is clear, money has to be raised. Logic also says you take from those who have got it.
In my mind, anyone who has created wealth will need to think more about how they manage their total wealth, not necessarily for growth, but for protection.