Of all the tax rise ideas in Rachel Reeves’ ‘almost no options’ budget, one stood out for the extent to which it was shot down: taxing employers’ National Insurance on pension contributions.
The row over taxing employers’ contributions to our pension pots gained momentum this week when it emerged that part of such a plan would involve reimbursing public sector pension schemes for the extra costs.
This would only expose private sector employers, potentially impacting their employees’ pensions and leaving taxpayers to foot the bill to protect more generous public sector schemes.
Hopefully this plan – dubbed ‘disastrous’ by pensions campaigner Ros Altmann – has now been shelved, but it raises another important question: how do we prevent a race to the bottom on pensions?
Public sector pension schemes are far more generous than their private sector equivalents, but the answer is certainly not to reduce the former, but to increase the quality of the latter.
In this podcast, Georgie Frost, Lee Boyce and Simon Lambert discuss the difference between public and private sector pensions – and how we can try to improve rather than damage our retirement savings.
Also in this episode, the two tricky taxes Lee hates, is it worth it for a 39-year-old to get a lifetime Isa before it’s too late, and are Goldman Sachs or Santander right with substantially different interest rate forecasts – and what does this mean for your mortgage?
And finally, where are Britain’s new property hotspots and why have things changed dramatically in some areas?
In private sector defined contribution pension schemes, money is paid in by employers and employees and invested to build up a pot; in the public sector, contributions are higher, but the employer guarantees an income at retirement; in the teacher program, this is 1/57th of the average salary for each year accrued.