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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Financial incentives to boost retirement savings exist to serve two principal policy goals. First, they reduce savers’ reliance on social welfare programmes in old age, easing the demographic burden on future taxpayers and enhancing fiscal sustainability. Second, they support investment, boosting economic growth and living standards.
The magnitude of tax breaks afforded by the UK government in pursuit of these goals is large. Pension contributions and investment returns are tax-exempt, but pensions in payment are not. HMRC calculates that total net pension income tax and national insurance contribution relief will come to £52bn in the 2023-24 year — not far shy of the UK’s spending on defence.
The UK is far from alone in offering tax relief to pension savings. In fact, every OECD country offers its own…
