Jeremy Hunt is helping rich instead of helping people into work, says thinktank

Elements of a plutocratic budget:

Gone are the days where your Pension savings automatically die with you or your spouse/civil partner.”..

“Savings within most modern defined contribution Pension products fall outside of your “taxable estate” and are therefore not subject to Inheritance Tax on death.

This makes them an extremely attractive vehicle for passing on wealth to future generations under current legislation.”

Especially if you are stinking rich – Owl

Richard Partington 

Jeremy Hunt’s huge pensions giveaway for the wealthiest 1% may have no impact on increasing the number of people in work, while opening a loophole for avoidance of inheritance tax, a leading economic thinktank has warned.

The Institute for Fiscal Studies said the surprise measure in the chancellor’s budget “probably won’t play a big part, if any” in increasing the number of people in work.

Paul Johnson, the director of the IFS, said: “It was disappointing that other over-generous aspects of pension taxation – not least complete freedom from inheritance tax – were not reined in.

“The lack of any coherent strategy here remains deeply disappointing. Don’t forget these changes are largely a rowing back on changes made just a few years ago by this government.”

In an attempt to encourage older skilled workers not to retire early, Hunt announced plans to scrap the £1m cap on tax-free pension savings. With the employers’ struggle to recruit staff holding back the economy, he argued the change would discourage NHS doctors in particular from quitting.

Labour warned the tax giveaway would benefit only the wealthiest top 1% of earners, while promising that it would reverse the chancellor’s decision to scrap the pensions lifetime allowance.

In its verdict on the budget, the IFS said it was “implausible” for the government to argue that it could not increase public sector pay on affordability grounds.

“You can’t keep cutting the pay of teachers, nurses and civil servants, both in real terms and relative to the private sector, without consequences for recruitment, retention and service delivery,” Johnson said. “Money will have to be found from somewhere.”

The IFS said there were “some elements of a sensible strategy to support growth” in the budget, including the chancellor’s focus on getting more people back to work. However, it suggested the government’s expansion of childcare support would have a “highly uncertain” impact on labour supply.

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