Lib Dems now proposing tax on pension withdrawals

The Liberal Democrats have now put forward a proposal that would see tax imposed on people who want to withdraw more than £42,000 from their pensions. A senior party source has said that the new proposals - which are being laid out this week by the Lib Dem-linked think tank, The Centre Forum - are all in line with the aim of the party's ministers and MPs to impose more tax on Britain's highest earners. "Reducing the tax benefits for the wealthy like this is something that the party is focusing on in a big way," the source explained.Pension holders can currently make tax-free withdrawals from their pension pots of up to £450,000. Withdrawing lump sums can help reduce tax in retirement, as it brings down the pension holder's monthly income. The co-chairman of the Lib Dem back-bench Treasury committee, Lord Newby - who is a close ally of Business Secretary, Vince Cable - is pushing the pension tax measure, stating that it should influence government policy.“A close inspection of this issue is long overdue," the peer explained. "Tax relief on pensions must not be ring-fenced from efforts to make the overall tax system fairer."

http://www.50percenttax.co.uk/index/2011/11/3/lib-dems-now-proposing-tax-on-pension-withdrawals.html