The Chancellor’s reported slashing pension tax relief for older workers is misguided, short-sighted and counterproductive, warns the CEO of one of the world’s largest independent financial services organisations.
deVere Group CEO Nigel Green’s warning comes as it is widely rumoured that Philip Hammond will reduce pension relief for older workers in his 22 November Budget in order to fund cutting National Insurance Contributions for workers in their 20s and 30s.
Mr Green comments: “Unfortunately, this misguided measure seems like it is almost a certainty as the government looks to raise revenue in a slowing economy.
“Following a less-than-desirable election, the Treasury will not be keen to increase VAT or income tax. Instead they can be expected to go for pensions. This attack on people’s retirement nest eggs demonstrates once again that the British government, which needs to bolster its coffers, views people’s retirement savings as easy, low-hanging fruit to be plundered.
“Raiding pensions has become something of a ‘no-brainer’ for successive UK governments as there’s plenty of funds within them, most of it belongs to the better-off section of society, and they get tax relief.’’
He continues: “This policy is fundamentally flawed, short-sighted and counterproductive.
“There’s a serious savings gap and yet the government seems intent on reducing one of the key drivers that motivates people to save for their future retirement. The measure likely to be announced by Mr Hammond will discourage a much-needed revival of a savings culture.
“Now more than ever, saving should be incentivised as retirement planning increasingly becomes a personal responsibility and as the country needs a financially secure older population for its long-term sustainable economic growth.”
Mr Green goes on to say: “With the Chancellor likely to confirm the changes next month, the time for older earners to act is now should they wish to consider taking the existing tax relief while it lasts.”
The deVere CEO concludes: “Whilst ‘intergenerational fairness’ is now finally being looked at, this measure of cutting pension tax relief for older workers is not the right way forward. Mr Hammond needs to go back to the drawing board and scrap this latest attack on pensions.”