Wednesday, 30 April 2008

Gordon’s stealth tax raid on the pensions of the poor

More of the ramifications of Gordon Brown’s infamous final budget slowly sink in. This time it’s the pensions of the less well off that take a pounding.

One wonders why these things only seem to really dawn on people once they are actually happening to them, it would appear that people just don’t have the sense to get out from under a falling piano when they see one. Or simply don’t recognise what they are seeing until it is actually affecting them.

The government is always banging on about the ‘pensions hole’ after Gordon brown personally helped create it with his infamous £5billion-a-year state stealth raid on pensions in 1997 where he abolished tax relief on dividends paid into pension funds.

This lead to the collapse of hundreds of final salary pension schemes and resulted in huge numbers of workers being worst off. It means unless everyone now has to make a bigger contribution or there would be rather less in the pension pot than had been expected - and the state was worried about having to support this, after having caused it.

A bit like spending the rent money on gin and then worrying about the landlord’s knock on the door.

All of this would not be so much of a problem if the state ran an honest pension scheme, with real money in it, that the contributions were actually invested in - but no they have a system where those who pay taxes have to cover the cost of pension contributions out of their taxes, less workforce, less tax.

When Gordon brown combined the bands that applied to the lowest paid, the lowest tax bands from 10% and 22% both to 20% it affected the amount of tax relief on low paid pensions in some cases dropping it This means that any of the poor who actually gained anything out of the change to 20% who was investing say £200 a month now has to cough up almost £50 a year more (£48) just to avoid loosing ground on their pension pot.

So if Gordon Brown, or any of his NL cronies wants to shake your hand on the run up to the Local elections, keep your other hand on your wallet and check you still have your watch afterwards and if they tell you they care about the poor and lower paid remember pension contributions and the abolition of the 10% rate that has not gone away, despite the spin.