Retirement savers should consider taking their tax-free lump sum now to avoid possible new tax charges after the general election, BDO Investment Management says.
Actuarial director John Broome Saunders warns the next government could introduce a lower-rate tax on the whole lump sum, but increase the current 25% allowance to offset this.
Broome Saunders says: "Pension scheme members would take home a similar, or possibly higher, lump sum and therefore wouldn't feel too upset. Moreover, the Revenue would get an immediate boost to tax revenues. Of course scheme members would lose out in the longer term, as they'd end up with lower pensions.
"Astute pension savers might be well advised to take their tax-free cash and start drawing benefits now, to avoid possible post-election changes."
Independent consultant Ros Altmann says the next government has to raise billions of pounds of new revenue so the attractiveness of all aspects of saving for top-rate tax payers is a very tempting target to raid for any future government looking to raise revenue.
She says: "The government keeps tweaking and attacking little bits of the system and undermining things - it has not done anything to improve pensions for lower earners. They need good incentives. Any top-rate tax payer should put as much in their pension sooner rather than later."
Altmann adds if changes occurred it would be a "total negative" for pensions and needed to be offset with something that encourages pensions for lower earners and we are just taking more money away from pensions.
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