Brexit promise could see UK pensions raided
UK prime minister Theresa May shocked many political observers when she promised a £20bn ($26.4bn, €22.8bn) funding boost for the National Health Service (NHS) by 2023 last weekend raising the question of how to pay for it. The debate shifted almost immediately to whether a Brexit dividend would be available due to the UK not paying into the EU as a full member or whether the economic disruption would actually mean less revenue was available. Thinktank the Institute for Fiscal Studies, in particular, insisted there was no dividend.
However, what is likely to be of interest to financial advisers wherever they stand, is that almost all commentators agree – dividend or not – that the extra funding will require higher taxes and/or more borrowing.
Behind the scenes, the Chancellor Philip Hammond was reportedly rather unhappy telling cabinet ministers that with such an NHS boost, there would be very little money for anything else.
By mid week, stories were appearing in the UK tabloids attributed to 'Treasury' or 'government' sources, suggesting that most of the burden would be shouldered by the better-off with less well-off workers in particular protected.
Advisers will certainly recognise some of the ideas.
First, and perhaps unsurprisingly, it was suggested that higher rate pension tax relief could be abolished raising as much as £10bn, unsettling advisers who specialise in the pension area. Please link to International Adviser to read the fiull article by John Lappin.