Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Pension Funds: Coronavirus

Treasury written question – answered on 5th May 2020.

Alert me about debates like this

Photo of Kirsten Oswald Kirsten Oswald Shadow SNP Spokesperson (Northern Ireland), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Work, Pensions and Inclusion)

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of allowing people aged under fifty-five whose income has been affected by the covid-19 outbreak to access some of their pension funds.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The government has introduced an unprecedented package of measures to help individuals and businesses affected by the crisis, including the Coronavirus Job Retention Scheme, changes to Universal Credit and Statutory Sick Pay that make it quicker and easier to access support as well as more generous, the Self-Employment Income Support Scheme, a business rates holiday, grants to smaller businesses, and a package of government-backed and guaranteed loans.

The government wishes to encourage pension saving. This is why, for the majority of savers, pension contributions are tax-free. This makes pensions tax relief one of the most expensive reliefs in the personal tax system. In 2017/18 income tax and employer National Insurance Contributions relief cost £54 billion.

The government therefore imposes a charge on early withdrawals, which can be from 40% to 55% depending on the circumstances, both to recoup its investment through tax relief and to provide individuals with a strong incentive to save through their pension for the long-term. There are no plans to change this aspect of tax policy.

Does this answer the above question?

Yes2 people think so

No0 people think not

Would you like to ask a question like this yourself? Use our Freedom of Information site.