Labour abandons plans to reinstate pension lifetime cap in £800m U-turn

Labour has reportedly changed course on its decision to reintroduce the pensions lifetime allowance, a move that would benefit savers. The Government had eliminated the previous £1.073 million lifetime allowance, with Labour initially planning to reinstate it if elected. However, shadow chancellor Rachel Reeves has removed this proposal from Labour's manifesto, citing complexity and uncertainty. The controversy over the lifetime allowance and its implications for pensions is detailed in a guide on the election's impact on retirement savings. The decision not to bring back the lifetime allowance is part of a series of U-turns by Labour leader Sir Keir Starmer. The party's abandonment of the tax raid on pensions has led to concerns about a growing financial gap in Labour's plans. The Tories argue that this U-turn will further increase Labour's financial shortfall, estimated at around £40 billion. Despite the reversal on the lifetime allowance, Labour has not ruled out other potential pension taxes, including taxing the state pension for the first time. This move is seen as an effort to dispel accusations of planning a tax increase if Labour wins the election. Labour's focus on stability and confidence for savers is emphasized, with calls for pension tax reforms to simplify the system and encourage long-term saving. The decision not to reinstate the lifetime allowance aligns with Labour's strategy to address uncertainties created by the Government's previous actions.