UK - The Conservative party has proposed a range of pension incentives aimed at reversing the decline in savings in the UK.
Options announced by the party include introducing a Lifetime Savings Account using matching contributions from the government, restoring the dividend tax credit for pension funds, increasing the tax-free annual limits for ISAs, allowing greater flexibility for people saving through ISAs, cutting the basic rate of income tax on savings income and introducing new tax credits to encourage employers to make pension contributions and arranging for their employees to receive financial advice.
Commenting on the plan, Shadow chancellor Oliver Letwin (pictured) said: “A strong savings culture is essential to give people security for the future and independence from the state.
“The decline in our savings ratio has been combined with a sharp increase in the amount of debt people are getting into. Conservatives believe that the tax system should encourage people to save for the future, not penalise saving.”
The party said that under the Labor government, savings had fallen by nearly half.
“Gordon Brown’s £5bn a year raid on pension funds and the spread of means-testing have badly damaged confidence in savings,” the party added.
The proposals for taxation of savings, released in a paper called Tax on Savings – A New Direction, is the sixth in a series of consultation documents seeking views on the options for reform of the tax system.
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