‘Whiff of radicalism’ about new Government – AJ Bell

A leading investment platform has suggested there is a ‘whiff of radicalism’ about Boris Johnson’s new Government, and that his Chief Adviser, Dominic Cummings, is recruiting ‘assorted weirdos’ to drive reform.

AJ Bell said the March Budget will give the first clear indication of the Prime Minister’s vision for the UK since winning an increased majority at the General Election.

In terms of pensions, the investment platform highlighted two key manifesto pledges that need to be addressed between now and the Budget reveal on 11 March 2020 – net pay and the annual allowance taper.

AJ Bell senior analyst, Tom Selby, suggested the issue of net pay has ‘plagued’ low earners for years, with those in the wrong type of pension scheme missing out on valuable tax relief.

“The Conservatives have promised a ‘comprehensive review’ to fix the problem, although it is by no means certain a solution will be found in the next three months,” he commented.

“The taper is perhaps the more pressing problem politically, particularly given the impact it has had on high-earning workers in the NHS. The Conservatives pledged an ‘urgent review’ within 30 days of entering Government – meaning in theory at least there are just days left to fulfil this promise.

“There is more than a whiff of radicalism about this Government, however, with the hugely influential Dominic Cummings at the heart of Number 10 recruiting ‘assorted weirdos’ to drive fundamental reform across Whitehall.”

In the 2017/18 tax year, AJ Bell reported the net cost to the Exchequer of tax and national insurance relief on pensions to be approximately £35bn.

The investment platform added that it was possible the reviews of specific pension tax problems could ‘open up Pandora’s Box’ by focusing the Treasury’s attention on the overall structure and cost of pension incentives.

“If a radical overhaul of tax relief is in the offing, it is important this is carried out sensibly and doesn’t risk the fragile savings culture currently being fostered in the UK,” Selby suggested.

“Ripping up the roots of our savings system without first understanding how this might affect the propensity of people to save for retirement would be a huge risk and could undermine the good work done so far under automatic enrolment.”

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