Andy Burnham, the Labour Party Prime Minister, has been encouraged by the pressure group Compass, supported by ally Neal Lawson, to introduce a ‘pensions sacrifice’ scheme. This proposal would allow affluent pensioners to voluntarily opt out of receiving their state pension for a period of three years or more.
The initiative aims to relieve increasing strain on public finances amid Britain’s escalating pension challenges, which have been intensified by an ageing population and the costs associated with the triple lock policy.
Compass detailed this policy in a comprehensive report presenting 100 recommendations intended for Mr Burnham’s first 100 days in office. Under the scheme, pensioners who choose to forgo their state pension from the Department for Work and Pensions (DWP) would be recognised with an honour akin to an OBE.
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The report suggests that the prime minister should “allow rich, well-off pensioners to opt out of their state pension for three or more years in return for a ‘Pensions Sacrifice’ OBE, as a reward for donating funds to education or another popular cause.”
This approach is inspired by the altruism exemplified by groups such as Patriotic Millionaires, described by Compass as a “nonpartisan organisation of high-net-worth individuals who advocate for higher taxes on the wealthy, better wages for workers, and a reduction in economic inequality.” Their mission is to use the influence of wealth to promote a more just, stable, and inclusive economy and to hasten the end of extreme wealth concentration.
In addition, Compass recommends Mr Burnham initiate a full independent review of both council tax and stamp duty within his initial 100 days. The objective would be to replace these with a fairer property tax based on current values, safeguarding those unable to pay, reducing costs for most households, and facilitating a more mobile housing market.
The report characterises council tax and stamp duty as “Britain’s most unfair and economically damaging taxes,” noting that council tax is still calculated based on 1991 property values, while stamp duty disincentivises moving, downsizing, upsizing, or relocating for employment.
Supporting this view, the Institute for Fiscal Studies has labelled council tax as “not fit for purpose,” describing it as “increasingly out of date and arbitrary, and highly regressive with respect to property values.”