George Osborne on Budget day © Getty Images
The UK chancellor’s most radical idea in a radical Budget was to turn the current system of pension taxation on its head. Instead of money going into a pension tax-free and then being taxed when withdrawn, George Osborne wants to consult on taxing the income that people pay into their pensions and allowing tax-free withdrawals when they retire. The benefits to the exchequer of such a change are clear — taxes brought forward for a potential windfall of £40bn — but the resulting impact on retirement savings would be dire.
According to a Chatham House report, the UK is due to experience “an impoverishment of its middle class in retirement” based on current savings patterns. The top and bottom income quintiles look OK but the low savings rates among middle-income households create a large gap between pre- and post-retirement incomes and lifestyles. Forfeiting the current top-up of 20-45 per cent (depending on one’s taxable income) on money put into an approved retirement plan would remove the key financial incentive to lock away funds for the future. Without that, Britain’s already low level of retirement savings would fall further. Read more
Smog in Harbin, northeast China © Getty Images
When the leaders of the world’s biggest economies gather this weekend at the G20 summit in Antalya, Turkey, they must recognise the real scale of subsidies for fossil fuels and accelerate their eradication.
In 2009, G20 leaders agreed to “phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest”. They acknowledged that “inefficient fossil fuel subsidies encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change”.
While that commitment has been restated at many summits since, action to implement it has been unacceptably slow. Read more