Labour is seeking to protect top public sector workers from its planned raid on pensions if they win the next election.
The Conservative Party will abolish the lifetime cap on pension savings from April, as part of an attempt to encourage more over-50s to return to work. But Labour has promised to reverse the change immediately if it is elected.
Labour said the reforms only benefit the “top one per cent” of wokrers, pledging to reimpose the £1.073m maximum cap on the amount that can be saved into pensions free of tax.
But as part of an attempt to prevent an exodus from the public sector, Sir Keir Starmer and Shadow Chancellor Rachel Reeves are said to be planning to reintroduce the cap “in a way that ensures we retain public sector leaders”.
Labour is seeking to protect top public sector workers from its planned raid on pensions if they win the next election
Senior Labour figures such as Starmer himself, chief of staff Sue Gray, and Rachel Reeves’ husband all have large public sector pensions. It is not clear whether or not they will benefit from the plan.
A Labour spokesperson refused to specify who would be affected by the plans.
A spokesperson said a “carve out for public sector workers” is “not our policy and it will not be our policy”, adding: “Our solution will reintroduce a lifetime allowance in a way that ensures that we retain public service leaders.”
The reintroduction of the pensions lifetime allowance is expected to affect as many as 250,000 people, an analysis by consultancy LCP said.
In October, after the Tories announced their plan to scrap the lifetime allowance, Labour promised to reimpose the cap. But the party said NHS doctors would be shielded from the changes in order to avoid an exodus from the health service.
The party has since admitted it is considering plans to ensure the retention of NHS workers, alongside “other public service leaders” who are “crucial”.
Senior Labour figures such as Starmer himself, chief of staff Sue Gray, and Rachel Reeves’ husband all have large public sector pensions
Gray, one of Starmer’s most senior advisers, had a pension worth £1.9m as of March 31 2023, government accounts showed.
Reeves’ husband Nick Joicey, a senior civil servant, had a pension approaching the previous limit at £967,000, as of March 31 2022.
A Treasury source told the Telegraph: “This proposal is nothing more than a hefty tax on private pensions to fund a special carve out that could well benefit key Labour officials.
“We removed the pensions tax to help keep our top doctors, police officers, military top brass and entrepreneurs in work. Labour will take us back to square one and tax millions into early retirement.”
The Labour Party has been contacted for comment.