Depends what you mean by a pensioner Joe - I wouldn't want to live on the State pension that's for sure. Private pensions are what you saved out of your own earnings, or rather from what's left after your earnings after they've been taxed left, right & centre or course. I don't see why relying on your own savings should be begrudged by anyone.
There's a great danger that pensions and pensioners are being blamed for the country's ills: a Government report concludes that the country's labour shortage isn't their own fault by taking us out of the EU but by pensioners who are having the gall to retire before they're in the 65-70 age bracket.
This is deemed to be due to over generous pension schemes and rules that define how early you can take them. Sounds like covering up your own ghastly Brexit mistake to me but you can see where it's leading: more tax on pensions. That also neatly ignores the fact that public sector pension schemes are far more generous than those in the private sector by the way..
After numerous raids on pension schemes, started by Gordon Brown's removal of reliefs on pension fund investments - despite the fact the fund is only the bridge between taxed earnings and taxable pensions, so it's triple taxation in effect - were was followed up by curtailment of tax relief on pension contributions and penal taxation of pension pots of over £1m.
The latest idea that's been floated in the press recently is that unused pension funds - which can currently be passed on to your nearest and dearest outside Inheritance Tax - could be taxed instead at punitive rates on death - 55% is being mooted. This is iniquitous for two reasons: firstly, such transfers are already taxable on the recipient when they draw the cash down and secondly because those that have built up such funds can do bugger all about it now.
This may sound like special pleading and it is, but there is a serious general problem here.
The reason why pensions were given favourable tax treatment way back when was to encourage workers to provide for their own retirement years. That's been severely eroded: very few employers outside the public sector now offer defined benefit (DB) pensions because Gordon Brown's raid on the funds made them too expensive. The investment risk over a working life has therefore been transferred from the employer to the employee and total contributions into schemes from employers and employees has fallen. The £1m limit on pension funds is one reason why doctors are leaving the NHS: the value of fund required to provide a meaningful DB pension to a doctor very quickly grows to £1m, after which non-cash investment gains within the fund bounce back into the doctor's monthly tax bill. As tax thresholds are not increased for inflation year after year, more and more will be dragged into this trap, let alone what will happen if the Government decides to slap on another stealth tax burden that few understand until it's too late .
All this is going to mean more and more people abandoning private pensions and ultimately more and more pensioners relying on the State pension. Unless they are to live in abject poverty, that means more tax for the working man in future generations.
