Rachel Reeves to u-turn on 'mad' raid that was set to hit pensioners

Rachel Reeves had been planning to cut the 40 percent level of tax relief that savers receive on their pension contributions to those earning £50,000 a year

Chancellor Rachel Reeves has reportedly put a stop to plans for a significant pensions tax raid after being warned it could negatively impact public sector workers, including teachers and nurses. It was suggested that Labour was planning further detrimental actions towards pensioners beyond the abolition of the Winter Fuel Allowance.

Ms Reeves had hoped to raise funds by reducing tax relief on those earning just £50,000 a year. However, senior Treasury officials advised the Chancellor that lowering the current 40 percent level of tax relief would affect those in good jobs who have dedicated their lives to the public sector.

For instance, a nurse earning £50,000 could face an additional tax bill of up to £1,000 a year. A senior Government source told The Times that such a move would be "madness", considering the Treasury's recent efforts to provide substantial pay rises to public sector workers.

This decision follows Labour's abandonment of plans to reintroduce the pensions lifetime allowance cap in June, after warnings that it would impact long-serving doctors and public servants, potentially forcing many much-needed professionals into early retirement. The cap was abolished by Jeremy Hund during the previous government as part of an effort to boost NHS staff numbers, with Ms Reeves criticising the move and promising to reinstate it in order to generate £800 million a year.

Steve Webb, a former pensions minister, has issued a stark warning about the potential impact of a pensions tax raid. He disclosed that such a move may force public sector workers to pay an additional 20 percent tax on their pensionable salary contributions, leading to a significant financial hit, amounting to hundreds of pounds annually, reports the Express.

Webb cautioned, "I don't think this is something that Reeves will want to do, not least because it will infuriate public sector unions just weeks after the government agreed pay settlements with them."

Unions have been expressing severe opposition to the proposed changes. The BMA pensions committee chair, Vishal Sharma, denounced the potential policy, arguing, "Attacking our pensions in this way would completely reverse this progress by once again taking money away from doctors in a different way."

He warned of the detrimental knock-on effect, suggesting it could, "Not only would this negate the recent hard-won pay rises but it would likely reignite the recent pay disputes that have been seen across the NHS."

Despite these concerns, pensioners are advised not to relax just yet. There are ongoing discussions that Shadow Chancellor Rachel Reeves might seek to plug the contentious £22 billion deficit by capping the tax-free lump sum people can withdraw from their pension pots upon retirement.

Currently, this figure stands at £268,275 and represents a cost to the Treasury of approximately £5.5 billion a year.

In another development causing unease among seniors, Dennis Reed, Director of Silver Voices, suggested yesterday that Labour leader Keir Starmer may target pensioner perks, including free prescriptions and bus passes. This follows the controversial decision to slash the Winter Fuel Payment.

In a piece for the Express, the author expressed concern for future governmental measures, stating: "If the Government successfully rides out this storm, they will inevitably squeeze senior citizens further, perhaps by means-testing free prescriptions, bus passes and even the state pension itself. It is time for older people to fight for our dignity in our remaining years on this planet."