Raiding pensions has become a habit for Chancellors looking to raise much-needed revenues, claims the head of expat financial planning firm deVere Group.
Successive governments have vacuumed up billions from pension funds – and Chancellor Phillip Hammond looks like he is about to repeat the trick in his Autumn Budget 2017, says the firm’s CEO Nigel Green.
In an interview published by magazine What Investment, Green said, “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.”
No-brainer
He argues the measure does not upset voters because the highest rates of tax relief are paid to those earning the most.
“Raiding pensions is something of a no-brainer for successive governments as there’s plenty of funds in them and most belongs to the better-off section of society and they get tax relief,” said Green.
“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.
Time to act
“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.”
Green expects to see pension contribution relief overhauled in the forthcoming Budget on November 22.
“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,” he said.
“While ‘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.”
