Labor has stepped up pressure on Rishi Sunak and Jeremy Hunt to reverse changes to pension provisions that do not benefit the “vast majority” of Britons.
The opposition said it would scrap tax relief for the chancellor’s budget pensions for high earners if it gains power in the next general election.
Mr Hunt believes scrapping life allowance, which is expected to cost £2.75bn over the next five years, will alleviate labor shortages, particularly in the NHS.
He has argued that it would encourage older workers, including senior doctors, to stay in work rather than retire early as their pensions reach the current tax-free limit of £1.07m.
Oversight body the Office for Budget Responsibility (OBR) estimated that adjusting pension provisions – which also included raising the annual amount people could pay from £40,000 to £60,000 – could increase the workforce by 15,000 people.
But Labor cited figures showing that in 2020-21 only 8,600 people incurred charges for a life allowance violation – 0.01% of the population.
The £1bn annual price tag for the pension reform package means it costs £70,000 for each of the 15,000 workers, who the HR Office believes will remain in work.
Shadow chancellor Pat Macfadyen said: “In the run-up to the budget, Labor called on the government to deal with the pension problems facing doctors. Indeed, we have been attacked by the Tories who have said such a proposal could not be tolerated.
“The vast majority of pensioners will not benefit from the government’s proposals because they will never come close to a pension fund of more than £1m.
“The government should rethink this giveaway and focus instead on a plan to deal with the early retirement problems facing the NHS.”
Chancellor of the Exchequer John Glenn said Labor should “stop playing politics” on the issue.
“Just a few months ago, Labor said they would abolish life allowance, saying it would mean ‘patients are seen faster’ and ‘lives will be saved’,” he said.
“The Conservative government wants to put more doctors in the front line of our NHS to cut waiting lists – workers need to explain to the British people why they are different.”
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