Rumours of No LTA Reintroduction in Labour Election Manifesto Due Thursday

Rumours reported in the Financial Times on Sunday/Monday have claimed that Labour has u-turned on its plans to reintroduce the Pension Lifetime Allowance (LTA) if it is elected to Government on 4^th July.

It was in fact the Labour Government on 2006 that introduced the LTA at £1.8m with protection for those that had already exceeded that limit.  The LTA has since been reduced on a number of occasions all the way down to just £1m in 2016/17 under the Conservative Government and then gradually increased again to £1,073,100 by 2020 to then be frozen and subsequentkly abolished by the Conservative Government in Spril 2023 and finally disappearing on 6^th April 2024.

Comment

The Lifetime Allowance was a cap on the total value of pension benefits you could build up during your lifetime.  In its latter years, the cap started to affect more and more senior workers, in particular NHS doctors and senior clinicians resulting in many NHS staff retiring or ceasing to take on additional works or overtime to avoid being penalised with tax penalties for exceeding the LTA.  The abolition of the LTA was and is a concerted effort to encourage more people to stay in work and carry on.

After the Spring Budget 2023, Labour vowed to reintroduce the LTA but much debate has taken place on the complexities of reintroducing it. 

• What happens to those that have started pension accumulation again and have exceeded the old LTA?
• What happens to those that have taken their pension benefits in good faith after the LTA was abolished?
• Will there be any protection if LTA was reintroduced?

We suggest a few weeks ago that if there was a risk of reintroduction, then perhaps you should take benefits now.  We do hope that the Labour Manfesto does confirm the LTA will remain in history.  That said, Labour does have a policy of taxing those with more so expect another raid:

• Higher capital gains taxes?
• A new wealth tax?
• A new property tax?

Whether it is Labour or the Consrevatives that are elected, it will still be the same Whitehall and Treasury staff advising them.  So do expect more stealth taxes to pay for the NHS, the cost of living grants, higher state pensions and of course covid-19 government debt.