Latest news with #BaronessAltmann
Daily Mail
13 hours ago
- Business
- Daily Mail
Pension funds told to back UK companies or face a tax raid in the autumn Budget
British pension funds have been urged to back UK companies – or risk a punishing tax raid in the Budget this autumn. Government figures show 20 per cent of a typical workplace pension pot is invested in the UK – down from 50 per cent a decade ago – with 8 per cent in equities. Much of the rest of the money is invested overseas, including in big US funds with exposure to tech companies such as Amazon, Microsoft and Nvidia. The lack of investment by pension funds in the UK has been identified as one of the reasons why the stock market is struggling. Former pensions minister Baroness Altmann urged fund managers to put more money into UK stocks – or see tax reliefs hacked away by the Chancellor in a desperate attempt to raise revenues. That would be a devastating blow to millions of workers who can save for their retirements tax free. Abandoning Britain: Government figures show just 20% of a typical workplace pension pot is invested in the UK – down from 50% a decade ago – with 8% in equities Speculation is mounting that Rachel Reeves will target tax breaks on pensions in this autumn's Budget to help fill a gaping black hole in the nation's finances. 'Obviously these reliefs are under threat if things carry on as they are,' said Altmann, adding that 25 per cent of new pensions contributions each year should be invested in Britain. She said: 'I don't understand why our pension funds think it is perfectly fine to take billions of pounds of taxpayer money and do nothing to benefit the UK economy with it. 'It seems to me that asking for just a quarter of the new money to be invested in our great British businesses and growth assets is not exactly unreasonable. 'If pension fund managers, however, don't believe Britain can deliver decent returns, they can invest more than 75 per cent abroad, but won't receive money from taxpayers.' Last week it emerged Scottish Widows is reducing the allocation to London-listed shares in its highest growth portfolio from 12 per cent to 3 per cent. A report by the Government in November found only around 20 per cent of savings in workplace defined contribution pension schemes is invested in the UK. The report found that this compared with domestic holdings of 22 per cent in Canadian schemes, 42 per cent in New Zealand and 45 per cent in Australia. The lack of UK money going into British stocks has been identified as a reason why so many London-listed companies are undervalued.
Daily Mail
16-06-2025
- Business
- Daily Mail
Hands off our pensions, ex-ministers tell Reeves amid fears savers will rush to withdraw cash to avoid being hit
Rachel Reeves is under mounting pressure to rule out a punishing tax raid on pensions to help fund her lavish spending spree as the economy tanks. Fears are growing that the Chancellor will target the retirement pots of millions of workers in the autumn as weak growth blows a black hole in her plans. Two former pensions ministers – Sir Steve Webb and Baroness Altmann – have joined the chorus of experts urging her to rule out such a raid. But the Treasury has refused to do so – fuelling speculation that pensions are in her sights. Months of rumours could prove highly damaging if – as was the case before the last Budget – it leads to a rush of savers withdrawing cash from their pension pots early to avoid being hit. Savings and investment company AJ Bell last week called on the Chancellor to introduce a 'pensions tax lock' that ruled out any changes for the remainder of this Parliament. This, it said, would 'offer investors the confidence to plan for the long term'. Webb, now a partner at pension consultants LCP, echoed those comments. 'Once again we have the return of uncertainty about the pensions tax regime,' he told the Mail. 'This annual spectacle is deeply unsettling for what is supposed to be a long-term business. 'It would be hugely valuable for the Chancellor to set out her position on pension tax breaks and then leave things unchanged for the rest of this Parliament so that people know where they stand and can plan accordingly.' Altmann agreed, warning speculation about tax changes is 'undermining people's ability to plan ahead and damaging confidence in pensions'. A raid on pension pots could see Reeves cut the maximum amount savers can withdraw tax free from the current limit of £268,275. Such a move was speculated before the Budget last October – leading to some savers withdrawing their money early despite warnings it could leave them worse off in retirement. Other options include taxing pension contributions, cutting the annual allowance or reinstating a lifetime allowance. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'It's important to learn the lessons from the speculation ahead of last year's Budget. We can't have a repeat of this for a second year.'
Telegraph
21-05-2025
- Business
- Telegraph
Your savings are a lost cause under Labour. These charts prove it
Common sense dictates that saving is a good idea, in order to provide security and a better life for you and your family. But anyone living in Britain today would be forgiven for thinking there is no longer much point. A leaked memo has revealed that Angela Rayner wants to see pensions and investments hit by even more taxes, with critics arguing harsh taxes are eroding the incentive to save. It comes as banking trade body, UK Finance, this week called on the Government to ensure a 'clearer, more stable tax environment' to encourage – rather than deter – long-term saving. Yet the deputy prime minister's demand to raise taxes follows a surge in money taken from savers to fill Chancellor Rachel Reeves's coffers. The amount of tax paid on savings interest has increased tenfold since 2020-21, soaring from £1.4bn to £10.4bn in 2024-25, according to official figures. The leaked memo revealed that ahead of the Spring Statement, Ms Rayner urged Ms Reeves to bring back the pension lifetime allowance, scrap the dividend allowance, abolish inheritance tax relief on Aim shares and extend the freeze on the additional rate income tax threshold. The lifetime allowance, a cap on how much someone could save into their pension without incurring a tax charge, was scrapped in 2024 by the previous government. Baroness Altmann, former pensions minister, warned that reinstating it could damage savers' confidence in pensions, especially since many pensioners had already had their plans 'upended' by inheritance tax reforms. She said: 'It feels like the Government is doing its utmost to undermine the incentive to save by chopping and changing policies. 'We have to make pensions an attractive vehicle for long-term planning, and these proposals are making a lot of people think they might not be because you might be hit by an unexpected tax bill.' The £20,000 cash Isa allowance is also still under threat from Ms Reeves as she plots a review of the tax-free savings regime to encourage more people to invest. Jason Hollands, of the investing platform Bestinvest, said: 'The environment for savers and investors in the UK has become steadily more hostile in recent years. 'While Rachel Reeves's inaugural Budget last October exemplified this with increases to capital gains tax, the capping of inheritance tax reliefs and bringing pensions into the scope of death taxes from 2027, we were already set on this path under the previous Government which aggressively slashed the annual capital gains and dividends allowances, and put in place multi-year freezes on tax allowances and thresholds.' This comes as inflation jumps to 3.5pc, figures revealed on Wednesday, eroding the spending power of savers' hard-earned cash. Frozen tax thresholds and higher savings rates mean the number of savers paying tax on interest has soared from 650,000 in 2021-22 to two million in 2024-25. With income tax thresholds frozen until 2028, millions of workers are crossing into the 40pc tax band at which point the amount of interest they can earn tax-free is cut in half. Basic-rate taxpayers can earn up to £1,000 tax-free, but this drops to £500 for higher earners. Additional-rate taxpayers get no personal savings allowance. These tax-free allowances were set in 2016 when interest rates were very low, but they have remained unchanged since then, and will be frozen until at least 2028 under government plans. Sarah Coles, of stockbroker Hargreaves Lansdown, said: 'Inflation has also seriously eroded the real value of the personal savings allowance, which hasn't moved at all since it was introduced in 2016.' She added: 'During the cost of living crisis, the cost of essentials rocketed, so people were forced to beef up their emergency savings safety nets. This will automatically have pushed an awful lot of people into making enough interest on their savings for tax to become an issue.' The average easy-access account currently offers 2.75pc interest, meaning a higher-rate taxpayer would need just over £18,000 before having to pay tax. This also means savers are effectively punished for seeking out better deals. A higher-rate taxpayer with £25,000 in an account paying 4.67pc – the best rate available – would owe £267 in tax whereas an additional-rate taxpayer would owe £525. Savers can stash up to £20,000 each year in an individuals savings account (Isa) which is tax-free. However, Ms Reeves is currently looking at altering the cash Isa rules to encourage investment in stocks and shares instead. A proposal to cut the cash Isa limit to £4,000 is still under consideration. Ms Coles added: 'The cash Isa has meant savers have been able to protect themselves from rising tax bills, so recent debate over the future of the cash Isa will raise concerns.' This comes after the Chancellor announced plans to bring pensions into the inheritance tax net from 2027, which some firms have warned could dissuade workers from saving for the long-term. Mr Hollands added: 'Such meddling undermines confidence in pensions as people feel the goals posts keep moving.' Banking experts warned that if Ms Reeves was to raise the corporation tax rate for the sector from 28pc to 30pc, mortgage borrowers and savers would likely end up paying the price. Stuart Cheetham, chief executive at MPowered Mortgages, said: 'Ultimately, what that will mean for banks is there'll be less retained earnings, therefore they'll underperform their projected positions. 'So they'll look to recoup that in some way if they can, which would typically mean a passing through of that to retail or corporate customers.' Mr Cheetham, who was previously responsible for Lloyds Bank's operations in Asia, compared a rise in the surcharge with Ms Reeves' National Insurance tax raid on employers. He warned: 'This will be like any tax rise for any business, I would expect it to ultimately go through to the end consumer.' It means that if Ms Rayner gets her way with taxing banks more, it risks undermining her push to raise homeownership. A Treasury spokesman said: 'We are committed to help our pensioners live their lives with dignity and respect, which is why in April the basic and new State Pension increased by 4.1pc. Pensioners will receive a boost of up to £470 to their income in 2025/26. Our commitment to the triple lock means millions will see their pension rise by up to £1,900 this parliament.'
Telegraph
14-05-2025
- Business
- Telegraph
Rachel Reeves has a dangerous sense of entitlement to your wealth
The Chancellor has now made it perfectly clear: your savings are not yours to do with what you like. Rachel Reeves this week threatened to force firms to invest a portion of their pension cash in Britain if they did not agree to follow her rules. She is also poised to finally announce a review into the future of Britain's Individual Saving Account (Isa) regime. Among the ideas she is considering is slashing the cash Isa limit down from £20,000 to £4,000 to encourage more savers to invest. The justification for both of these acts of needless meddling will be both to boost growth in Britain and also improve outcomes for savers. The problem is neither of these are guaranteed and leaving it all well alone is likely to be a much smarter idea. There can now be no doubt that Reeves is a Chancellor who believes that she can help herself to your money to gamble on growth. It wouldn't be so galling if she had not already launched a death duty raid on our pensions and triggered an economic crisis with her jobs tax. To suggest that private companies could be forced to invest how the Government sees fit is a disgrace. However, the real fear is that this is simply the thin end of the wedge. Former pensions minister Baroness Altmann has already suggested that pension savers should lose tax relief if they do not back Britain. Reeves's pensions plot has already seen 17 major pension firms sign up to invest at least 10pc of assets in private markets, including half of that in British companies. Yet the Government's own actuaries have advised her that this will have little or no impact, and the fees involved could wipe out any gains for individual savers. None of this should be mandated, we should want to invest in Britain because it is an attractive thing to do, not because we are forced to. Besides, there are plenty of other options available. Reeves could abolish stamp duty on investments by Britain's pension funds, or she could reinstate the tax relief Gordon Brown took away in 1997. If Reeves is allowed to get away with this, there is no end to what powers Governments might exploit to get our money working harder for them and not us. The victims will be those who are not engaged with their pensions. More astute savers will move their money out of so-called 'default' funds to make it work harder elsewhere. And of course, one of the reasons why Britain is not an attractive place to invest is the heavy tax burden, partly enforced by Reeves, that is stifling growth. The Chancellor is also poised to announce a second act of reckless interference – a shake-up of valuable tax-free Isas. Now, if she were a progressive chancellor, Reeves would increase the annual allowances to catch up with inflation, or perhaps abolish inheritance tax on Isa savings. But relaxing taxes to boost growth is not something she understands. This is a Chancellor who once said that the one thing she would change about the tax system was slashing pension tax relief for high earners. These tax incentives exist to encourage people to save so they are not reliant on the state later in life. Reducing the benefits of saving into cash Isas will only punish those who prudently save for their future. The only winners will be fund management firms in the City who will help themselves to more of your money through charges levied on stocks and shares investments. Reeves wants you to invest for what is best for Labour's Britain, rather than you. She has no right to dictate how we invest our money, it should be none of her business. Labour is building the ultimate nanny state – a Government that doesn't trust you to do what is best for you. Above all, our pensions and savings are not playthings for a desperate Chancellor scrambling for growth.
