Last week, Labour appointed Torsten Bell as Pensions Minister, a move that should send shivers down the spines of pensioners. Bell has spent much of his career crafting proposals that will leave them poorer.
Bell, fresh-faced and decades away from retirement, won’t have to worry about his own finances when he gets there.
As former head of left-wing think tank the Resolution Foundation, and now an MP, his generous pensions are secure. Ordinary pensioners, however, should be worried, because Bell is coming for theirs.
He’s long been critical of the state pension triple lock, dismissing it as a “silly system.” Yet for millions of pensioners, it’s deadly serious.
The triple lock, while imperfect and due for reform, has lifted millions out of poverty over the past decade. If Bell gets his silly way, they face slipping back into hardship.
Bell’s appointment is a clear sign that Westminster’s war on the triple lock is escalating.
While many critics would like to see the back of it, Bell’s ambitions don’t stop there. Last year, I described his plans to attack our pensions as nationalisation of the nation’s personal wealth.
Bell has grand plans to hit pensions on four key fronts – and he’s already scored an early victory.
Before the autumn Budget, he urged Reeves to impose inheritance tax (IHT) on unused defined contribution pension pots.
Reeves followed his advice, with the change set to take effect in March 2027. In fact, the policy is even harsher than Bell proposed.
Under the new rules, families may face both IHT and income tax on inherited pensions – a so-called double death tax.
And with Bell driving the agenda, the final charge could be even more punitive.
But he’s not stopping there. Bell has three more pension reforms in his sights.
First, he’s targeting our tax-free cash. This is arguably the most popular pension benefit of all.
Currently, savers can withdraw 25% of their pension tax-free, up to a maximum of £268,275. Bell has previously suggested slashing this to £100,000, or even as low as £40,000 in his more extreme ravings.
Next on his list is tax relief on pension contributions, currently set at 20%, 40%, or 45%, depending on income.
Bell believes this unfairly benefits higher earners and has called for a flat rate of tax relief, perhaps around 25%.
While this would save the Treasury billions, it would also discourage saving and deal another blow to the UK’s already fragile savings culture.
He won’t stop there.
Bell is a big fan proponent of the lifetime allowance, a Byzantine rule that capped the total people could save in a pension and taxed the surplus at a punitive 55%.
How anybody who claims to understand pensions can support such a complex and punitive mechanism beats me.
While Reeves seems to have ruled out its reintroduction, Bell’s influence could see her reduce the annual allowance – the amount savers can contribute each year – from £60,000 to £40,000, or even lower.
Encouraging people to save for retirement is already difficult. Allowing Bell to unleash these measures would make it even harder.
The message is clear: make the most of your existing pension tax breaks while you still can.
Reeves’ baby-faced pensions assassin is ready to wield the knife, and he’ll cut as deep as Reeves will allow.
Heaven help pensioners if he takes over as next Chancellor.
READ: Meet the man who’ll replace Rachel Reeves – and his fanatical plan to hike your taxes.
