Labour in £800m U-turn as party abandons plans to bring back pension cap
The Labour Party has abandoned plans to reintroduce the cap on tax-free pension savings
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The Labour Party has abandoned plans to reintroduce the cap on tax-free pension savings.
The lifetime pensions cap previously limited the amount that people can save in pension schemes.
The policy is expected to be worth around £800 million - prompting concerns over gaps in the Labour Party's finance plan.
The party blamed the U-turn on the Tories, saying Labour's goal is to bring back "stability".
The Labour Party has abandoned plans to reintroduce the cap on tax-free pension savings
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A source told the Telegraph: "The Conservatives have botched their policy of abolishing the lifetime allowance, with thousands of people approaching retirement being left in limbo because of errors in legislation."
They said Reeves plans to "sort out the mess", saying: "Labour’s priority is to bring stability and certainty back to the economy."
Speaking to Sky, Labour's Shadow Education Secretary, confirmed the decision, saying: "It wouldn’t have been our priority to make that change but the Government have created an awful lot of uncertainty for people who are looking towards retirement so no, we wouldn’t be bringing that back and that is about making sure we have got stability and security for people going into this election."
But chief secretary to the Treasury Laura Trott hit out at the party for what she dubbed a "black hole" in their finances.
She said: "Despite this U-turn, which adds another £3.2 billion to their £38.5 billion black hole, Labour have failed to rule out a swathe of pensions taxes and their retirement tax will mean the state pension being subject to income tax for the first time ever.
"It’s very clear that Labour will raid pensions, just like they did last time, making people’s retirement less secure."
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At the time, Reeves said the axing of the cap was the 'wrong priority, at the wrong time, for the wrong people'
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The lifetime pensions cap was abolished in 2023 as part of a bid to discourage older works from retiring early.
At the time it was abolished, Labour pledged to reinstate it if it was elected.
Reeves said the axing of the cap was the "wrong priority, at the wrong time, for the wrong people".