Average UK worker would have to save for 400 years to benefit from Hunt tax perk, says Labour

The average worker in the UK would have to save for 400 years to qualify for the pension giveaways announced by the chancellor, the Labour Party has claimed.

The party says that the average worker only has one tenth of the amount they would need to benefit from the £1bn pension giveaway announced in Jeremy Hunt’s budget last month.

Mr Hunt confirmed in March that he would scrap the lifetime allowance on pension savings, allowing people to put aside as much as they can in a private scheme without being taxed – removing the previous £1.07m limit.

The chancellor also increased the annual tax-free pension savings allowance by 50% from £40,000 to £60,000. Taken together, both measures will cost the taxpayer £1bn.

But data from the Office for National Statistics shows that the average person approaching retirement age has an average of £107,000 in their pension funds – just one tenth of the amount that would need to be saved to qualify for Mr Hunt’s tax relief.

Labour says the average worker would have to continue working and saving for 10 times as long as they had before they would benefit from a tax saving, which equates to four centuries.

The measures announced by Mr Hunt were designed to prevent doctors from retiring from the workforce early as the NHS continues to struggle with the workforce shortages.

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Defending the decision at the time, Mr Hunt said he had “listened to the concerns of many senior NHS clinicians, who say unpredictable pension tax charges are making them leave the NHS just when they are needed most”.

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Labour has argued that the reforms should only apply to doctors and has pledged to reverse the changes if it wins power at the next election.

The party has also questioned how many doctors will benefit from the changes after the government’s own data suggested only 105 doctors left the NHS due to early retirement last year.

Angela Rayner MP, Labour’s deputy leader, said: “Someone starting out their career today would have to work until the year 2423 before they’d see a penny from the Tories’ tax giveaway to the top 1%.

“At a time when families across the country face rising bills, higher taxes and frozen wages, this is the wrong priority at the wrong time.”

Conservative Party chairman Greg Hands said: “Labour’s approach puts doctors into retirement, ours puts doctors back on wards cutting waiting lists.

“Whilst Labour continue to play politics we will continue delivering on our pledges to halve inflation, grow the economy, reduce debt, cut waiting lists and stop the boats.”

Mr Hands also pointed to reports that Keir Starmer was granted a generous “tax-unregistered” scheme relating to his time as director of public prosecutions (DPP), allowing him to avoid tax on his savings.

However, Sir Keir has indicated he would scrap the tax perk that applies to him if he wins power.

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