tax cuts for the wealthy old

Plans to give pensioners more freedom over how they spend retirement savings amount to a “massive tax cut for the really well off,” industry experts said.

From April, compulsory annuitisation – the rule that means pensioners must buy a life-time income with their pension pot by the age of 75 – will be axed. Those able take advantage – thought to be around 50,000 people or around only 1% of people of retirement age – will see the rate of tax cut on savings they do not annuitise after the age of 75 from 82% currently to between 20% and 55%.

“These measures will only help the very, very wealthiest pension savers,” said Dr Ros Altmann, director-general of Saga. “This is a massive tax cut for the really well-off which is financed by a tax increase on those lower down the income and wealth scale.”
Steve Patterson, managing director of Intelligent Pensions, in Glasgow, said those most likely to take advantage would be pensioners with high guaranteed pension incomes. "... the additional flexibility will be helpful and probably for people who have got resources beyond their needs. To the extent that this will allow additional tax-planning, it is for people who are well-heeled.”