A piece in today’s Financial Times has revealed that Labour have decided not to reinstate the pensions lifetime allowance (LTA), a move that would have reintroduced a cap on tax-free pension savings, affecting NHS pension scheme members.
Shadow Chancellor Rachel Reeves dropped this proposal from Labour’s upcoming election manifesto, citing the complexity and uncertainty it would introduce for savers such as NHS pension scheme members. This decision is part of Labour’s strategy to reduce risks in their election campaign and avoid tax-raising policies that could be targeted by the Conservatives.
The LTA was abolished by Chancellor Jeremy Hunt in April 2023, benefiting wealthier savers, including doctors in the NHS Pension Scheme. Previously, Labour had committed to reversing this change, but concerns from the British Medical Association about potential negative impacts on senior NHS staff led to a reconsideration.
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