The UK is reviewing a comprehensive overhaul on its taxation on private pensions including retirement plans. So far, the UK has adopted the system in which contributions, investment income and capital gains are tax exempt while pension benefits are taxed. The so-called EET system has been widely adopted by many countries including Korea. But after the Conservatives won the general election in May 2015, they announced a proposal for a shift towards a new system in which pension contributions are taxed upfront.
Such a policy shift in the UK purports to address the large shortfall in tax revenues accumulated due to the country’s long-standing tax relief and annuitization policy. But Korea’s pension taxation should prioritize increasing retirement assets and stabilizing post-retirement income.