Thank tank proposes ISA and pension savings “fluidity”
A leading UK think tank is calling for radical reforms in the savings market.
In a new report from the Centre for Policy Studies, savings and pensions analyst, Michael Johnson, recommends changes that would bring ISAs and pensions closer together.
He suggest that “fluidity” between ISA and pension savings could be improved by combining pre-retirement access to some pension savings and, at retirement, retrospective tax relief on ISA assets re-nominated as pension savings.
Other key proposals contained in the study entitled “Simplification is the key: stimulating and unlocking long-term saving”, include:
Setting an annual contributions limit of £45,000 a year for all tax-incentivised savings (with a maximum of £35,000 for pensions);
Allowing partners to fund each other’s pension pots and receive tax relief, irrespective of their own earning circumstances;
Permitting savers to bequeath unused pension savings to third parties’ pension savings, free of inheritance tax;
Extending auto-enrolment to include ISAs and making annuities purchased with ISA-derived funds exempt from income tax.
According to Mr Johnson, four alternative tax relief structures recommended in the report could save the Treasury up to £8.5 billion per year, without risking a sharp reduction in long-term saving.
Category: Insurance News
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