So let us have HMRC redirect what it collects by way of the LTA charge, which has certainly been in excess of £100m over the past three years, into supporting the £10,000 payment process. This would redistribute part of the wealth created by the tax-incentivised pension system and good investment performance. For many this could make the LTA charge more palatable and for those with a philanthropic nature, the charge actually becomes a force for good rather than one of evil.
But what about helping resolve the other financial woes of youngsters identified in these informative papers? There are no quick fixes as wealth redistribution is a long-term game, but further thoughts include:
- The £10,000 kickstart pension contribution could ease the dilemma between making voluntary pension contributions above the minimum auto-enrolment levels and saving for a deposit, spending on further training/education or reducing debt.
- The government could work with the financial sector to reintroduce pension-linked mortgages to aid house purchases.
- In time, pension funds can be used to support setting up and running a business through the purchase of commercial property via a Sipp or small self-adminstered scheme and for the latter product, the loanback facility too.
All in all, pensions, with virtually no adaptation required, are already the perfect product to partner initiatives to rebalance intergenerational wealth.
So, let’s not give away £10,000 too quickly and unthinkingly. Instead, let’s invest in young people and their future.
Robert Graves is head of pensions technical at Embark Group
