“We saw that the announcement of the new health and social care levy is going to continue that trend. If your employer puts money into a pension on your behalf, it will escape that levy on the way in, and that levy is not being paid on pension income in retirement,” Emmerson explained.
“So I think there is a strong case for some National Insurance contributions being levied either on employer pension contributions, or on pension income in receipt, and there is lots of revenue at stake here.”
He added the final area where the existing regime was overly generous was pension pots that are bequeathed, which is “indefensibly generous” and turns pension pots into vehicles for inheritance, not retirement savings.
Chris Curry, director of the Pensions Policy Institute, questioned whether it was even desirable to try and source £5bn from the pensions system.
He said: “There’s always decisions to be made. There’s always advantages and disadvantages to certain options. There’s always winners, and there’s always losers. But to my mind, if you're trying to take £5bn out of the system, it’s very hard to create winners in that particular sense and all you’re going to do is create losers.
“So I think that there’s a lot of discussion that we need to have to think about, what is it we’re actually trying to achieve by taking £5bn out of the system, and even prior to that, what is it that we think the whole pensions system is actually trying to achieve in itself.”
The government’s temporary suspension of the triple lock reopened questions about the long-term sustainability of the system, and the suspension itself might turn out to be a long-term solution, he added.
Myers suggested that, especially in light of recent moves such as the social care levy, “we are probably a little bit less likely to see another radical announcement on tax from the government. Maybe pensions is not going to be the place where we’re going to see huge radical reform”.
Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert