Tom McPhail, of financial consultancy The Lang Cat, said: “I don’t think anyone who knows anything about pensions would consider this one of the most generous occupational pensions in the UK.”
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Under Sir Keir’s agreement with the government, his DPP pension is increased annually to keep pace with rising prices.
Experts estimate he will have nearly £700,000 in the scheme at retirement, based on his nest egg being 20 times the annual pension – £620,000, plus a lump sum payment of £74,000.
But the money grew in this pot falls outside the lifetime limit which applies to his other pension savings. Sir Keir’s MP pension is estimated to be worth around £300,000, this combined with the £700,000 DPP pension would come close to the current ceiling of £1,073 million if subject to normal tax rules – before any private pension from his time as a lawyer was taken into account.
However, as his pension from the DPP is not counted towards the lifetime benefit, this means he can save an additional £700,000 for pensions without penalty, based on the fact that £300,000 is already accounted for using his MP pension.
John Ralfe, independent pension adviser, said: “If Sir Keir Starmer’s DPP pension were covered by the lifetime benefits rules, combined with his Parliamentary pension, he could be on the verge of hitting the £1.07 million limit. reach.”
If Sir Keir would shut up exceed the lifetime benefit in his parliamentary and private pensions he would have a tax rate of 55 per cent. pay on each amount withdrawn at once. But any lump sum he receives from his DDP pension will instead be taxed at a lower rate of either 40 percent as a higher rate taxpayer or 45 percent as an additional rate taxpayer.
The Cabinet Office has yet to confirm whether the Labor leader was eligible for additional payments from his DDP pension to cover any lump sum tax bills enjoyed by judges. Labor was contacted for comment.