Daily Mail

Hands off Tory voters’ pensions, Hammond warned

- By James Burton City Correspond­ent

ANGER was growing last night as it emerged Philip Hammond could raid middleclas­s savers’ pensions to fund a public spending spree.

The Chancellor is reportedly plotting to cut the tax relief that encourages savers to build up a nest egg, as he tries to find an extra £20billion for the NHS.

Sources claim that the raid would be targeted at only the highest earners, but critics fear it would set a dangerous precedent for a wider assault on pensions.

Baroness Ros Altmann, an ex-pensions minister, said: ‘I advise the Chancellor to think very, very carefully before messing around with tax relief on pensions.

‘There’s a huge amount of resentment against changes of this kind, particular­ly among Conservati­ve voters, because there would be quite a lot of losers.’ She said simply using the money for something else would risk a backlash from savers.

Steve Webb, also a former pensions minister and now policy director at savings firm Royal London, said: ‘Pension tax relief shouldn’t just be used as a pot of cash when money is short. If we’re going to change pensions and tax, let’s think about it, let’s plan and let’s give people certainty.

‘Let’s not just have broke chancellor­s dipping into the pot when they’re short of a bob or two. Pension taxes ought to be very predictabl­e because they’re of long-term importance ... this constant tinkering is no way to run a tax system.’

Under present rules, workers do not pay any income tax on pension contributi­ons unless they save more than a certain amount a year. This ‘ annual allowance’ limit is £40,000 for most people, but it is feared that the Treasury may seek to change this so that more contributi­ons are taxable.

Under a separate ‘lifetime allowance’, savers face being taxed if they build up a pot worth more than £1million.

Although this sounds like a large amount, it would only guarantee a retirement income of £30,000 a year rising in line with inflation.

A senior Government source told The Mail on Sunday that the £38billion of annual pension tax relief is ‘one of the last remaining pots of gold we can raid’. The Treasury could also scrap a long-standing tax break for investors who back small businesses to raise extra money, and may hike duties on spirits. A Treasury spokesman said: ‘We don’t comment on Budget speculatio­n.’

THE gulf between the generous pensions enjoyed by public sector workers and the rest of the population is laid bare today.

A TaxPayers’ Alliance study found there would be a yawning disparity between the pensions of new public and private sector employees aged 25 on the national average wage of £28,600 and making the same level of contributi­ons.

At 2018 prices, the difference would be £11,151 a year.

‘No way to run a tax system’

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