The UK government has shied away from a complete overhaul of pension taxation, but it stands accused of introducing reforms via the back door.
The shift to a taxed-exempt-exempt (TEE) model over the current exempt-exempt-taxed (EET) model was widely feared after chancellor of the Exchequer George Osborne last year launched a review of taxation and signalled his interest in promoting individual savings accounts.
“For the basic rate taxpayer, the Lifetime ISA is the equivalent of tax-free savings into a pension, and, unlike a pension, you won’t pay tax when you come to take your money out in retirement,” said Osborne. He added that the ISA would offer self-employed workers “the kind of support they simply cannot get from the pensions system today”.
The Budget also endorsed proposals by the Financial Advice Market Review – a joint Treasury and Financial Conduct Authority project published earlier this week – to introduce a pensions dashboard by 2019.
The initiative, which the Treasury said would be funded by the industry, will see the establishment of a web portal displaying an individual’s pension savings, mirroring the approach of similar projects in the Netherlands, Denmark and Belgium.
It also threw its support behind the reform of the local government pension schemes (LGPS), which have recently been discussing the creation of seven or eight asset pools formed through collaboration between the 89 funds within England and Wales.
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