We are the voice of insurance and long-term savings | Contact us

Stop tinkering with pensions tax relief lets build a sustainable long term model

On the eve of the 2014 budget, the ABI calls on the chancellor to resist the temptation to tinker with pensions tax relief and to instead build a sustainable long term model.

Some of the UK’s leading politicians have talked about reducing the amount of tax relief paid to higher income savers in order to fund new initiatives.

There are also plans to look again at further reductions to the Lifetime Allowance, which has already been cut from £1.5m to £1.25m this April.

Politicians of all parties need to remember that the pension system is not just a money pot to be dipped into when politically convenient.

It is made up of the savings of real people who have done the right thing and worked and saved hard all their lives for their retirement. These people deserve some certainty around what is going to happen to their money.

Automatic enrolment means millions more people are saving and we hope that they will keep saving all their working lives. Although the Lifetime Allowance sounds like the kind of money only the very rich could save up, that is not actually the case.

Otto Thoresen, Director General, Association British Insurers, comments:

"Government and industry can both agree we think people should save more into their pension but if they do that even people earning the average wage could find themselves reaching the Lifetime Allowance limit. The current political pattern seems to be to freeze or reduce the limit, but still expect people to save more. This is a trend that cannot continue if we want people to be encouraged to build up a decent pension pot.

"The ABI and its members would support changes which delivered for savers but believes we need to be honest about why these changes are being made and who they are going to impact. We cannot keep punishing savers for doing the right thing and expect people to retain faith in a system which encourages them to lock their money away, investing for their retirement if this sees their hard earned savings pot shrunk by the whims of the political cycle. Let’s stop the merry-go-round and have the courage to make the tough choices needed to help future generations.”

Last updated 01/07/2016