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The Conservatives have announced the first of what will probably be many pre-election bribes, saying they will end a tax on ‘defined contribution’ pension pots that kicks in when the recipient dies.
At the moment, the government takes 55 per cent of untouched money in such pension pots, and from pensions that have not been used at all. From April 2015, inheritors will only pay the marginal income tax rate, or no tax at all if the deceased was under 75 and the pension is left untouched, according to reports.
The new policy means the Treasury will lose around £150 million per year and 320,000 people will benefit. This is very few people in the national scheme of things, but each of them stands to make nearly £470,000.
But let’s put this into perspective: The total number of pensioners in the UK is around 12,300,000.
So you can see that the Tories are appealing very much to their own constituency – the privileged few who have been able to build up pensions of that size.
It is likely they are hoping most people won’t do the sums and will assume the Conservatives are making another big giveaway to pensioners. This is the population group that is most likely to vote in any election, so the Tories are naturally keen to keep them on-side – especially after a series of announcements earlier in the current Parliament that were far from beneficial to people coming up to retirement and downright prejudiced against young people coming onto the job market, while retaining the pension benefits available to MPs.
In the light of all this, let’s have another poll:
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