Pensions tax relief must be protected to boost saving

Giving evidence to the House of Lords Economic Affairs Finance Bill Sub-Committee on the recent Budget on Wednesday 20 May 2009, the ABI's Director of Life and Savings, Maggie Craig, is expected to say: "The Government's decision to restrict tax relief on pension contributions for people earning over £150,000 a year could have a damaging impact on pension savings in the UK. The move will also add an extra layer of complexity to pensions, in direct contradiction of the ‘A-Day' measures introduced in 2006 to simplify the pensions tax regime. While the measure itself will affect only a small number of very high earners, we are concerned that the principle that people who save for their retirement will get tax relief has been breached. Tax relief exists as compensation for responsible people who agree to defer some of their income now, so that they are less reliant on the public purse in retirement.

"The Government and the main Opposition parties must not undermine the principle of tax relief on pension savings any further by continuing to remove tax relief, either now or in the future. To do so would seriously damage public trust and confidence in the UK's pension system. That would mean less saving overall, and the prospect of a massively increased public bill for looking after people in retirement."