Pensions  

ABI warns of axe about to fall on pensions tax relief

ABI warns of axe about to fall on pensions tax relief

The director general of the Association of British Insurers has attacked election promises that involve cutting pensions tax relief as he joined the call for an independent retirement savings commission.

Huw Evans demanded more long-term thinking as he joined the call for a commission looking at the world of pensions.

He said: “All we have had are proposals to raid pensions tax relief to pay for headline-grabbing policies such as tuition fees and inheritance tax, with no debate at all about how best to reform the system to ensure people save more.”

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The Labour party has promised to cut tuition fees from £9,000 to £6,000 a year by restricting tax relief on pension contributions for the highest earners and clamping down on tax avoidance.

The Conservatives have promised to increase the effective Inheritance Tax threshold for married couples and civil partners to £1m, with a new transferable main residence allowance of £175,000 per person, funded by reducing the tax relief on pension contributions for people earning more than £150,000.

Mr Evans’ comments came at the launch of the National Association of Pension Funds report, The Case for an Independent Retirement Savings Commission.

In the 44-page study, figures from the NAPF, ABI, Trades Union Congress, Chartered Insurance Institute, United Utilities Group, International Longevity Centre-UK, the People’s Pension, Kingfisher Pension Trustee, the Federation of Small Businesses and RailPen Management Institute make the case for the independent commission.

NAPF chief executive Joanne Segars said: “One of the first actions for the new government must be to establish an independent retirement savings commission.

“Its job would be to create that long-term view of the retirement savings system, build consensus around it and hold the government to account for delivering it.”

Other groups have made similar demands this year. In March, the work and pensions committee called for the establishment of a new independent pension commission, along the lines of the 2005/6 pensions commission, to assess the effects of George Osborne’s pension reforms.

In February, ILC-UK made its own call for a pensions commission.

In the same month, in his 34-page document The Heath Report Two, industry campaigner Garry Heath wrote: “A royal commission should be set up to define what citizens should reasonably expect from the welfare state and what they need to provide for themselves.”

Adviser view

Laith Khalaf, senior analyst for Bristol-based Hargreaves Lansdown, said: “Higher and additional rate taxpayers to consider bringing forward pension contributions, as the days of the current tax relief system look numbered, whoever gets into power.”