Tax relief: Rumours abound as chancellor pressed on plans

An email to potential delegates ahead of the PLSA’s annual conference next month included a reference to a keynote speech by Emma Reynolds, the pensions minister. It said she would talk about “the new government’s plans for pensions including a Pensions Review, a Pension Schemes Bill, and a change to pensions tax relief”.

However, a spokesperson for the PLSA told Pensions Expert that the tax relief reference was due to a “drafting error”, and emphasised that there had been no communication from government on this area of policy.

Any updates on tax relief would come from the government directly and not from the trade body, the spokesperson added.

Responding to speculation on X, formerly Twitter, following the communication, Katy Little, head of parliamentary and stakeholder affairs at the PLSA, posted: “I wouldn’t read too much into this.”

David Brooks, head of policy at Broadstone, said that, if the government was to explore changes to the tax relief system, it would “want to ensure that the cost of tax relief to the exchequer is deployed appropriately and if there can be cost savings these will be important to realise”.

He added: “Given the complexities that may come with any new system one has to expect a consultation on implementation of this new method. This may come with some changes the language used to ensure people see the benefit to them of saving in a pension.”

The PLSA Annual Conference takes place from 15 to 17 October in Liverpool, with Reynolds addressing delegates at 4:30pm on the first day. Chancellor Rachel Reeves is scheduled to deliver her first Budget statement on 30 October.

Parliamentary questions

Rumours of changes to pensions tax relief were further fuelled after an exchange in parliament on Tuesday between Peter Bedford, MP for Mid Leicestershire, and the chancellor.

Bedford asked: “What assessment has [the chancellor] made of the adequacy of the level of tax relief for occupational pension contributions?”

He also asked whether the government recognised that reducing tax relief could be a “disincentive” to save and could “lead to more pensioner poverty”.

Reeves said any questions about tax would be addressed in the Budget, and reiterated the aim of the Pensions Review to “ensure that money set aside for retirement is working both for pensioners and for the UK economy”.

She added: “For many people who work hard and save for retirement, that money is not enough. I recognise that, and I believe that every penny saved into a pension should get a decent return.

“Billions of pounds of investment could be unlocked in the UK economy and could work better for those saving for retirement, [and] we believe that the reforms we look to bring in through the Pensions Review could improve the pension pot by £11,000 for people saving for retirement.

“That’s why the Minister for Pensions is leading that review, to ensure that pensioners get a good deal in retirement, and that people who sacrifice and work hard to save for their retirement get a decent return on that investment.”

Bedford later posted a video of part of Reeves’ response on X and added: “You can make your own mind up as to whether she guaranteed that these incentives would remain in place.”

Further reading

Calls for pension tax overhaul as HMRC refunds over £56m in overpayments (20 July 2023)