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Pension Tax Relief

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In opposition, George Osborne repeatedly stressed he would be a pro-savings chancellor. At this very difficult time for savers, he needs to live up to his promises and resist the temptation to view pensions as an easy, short-term hit.

Here are 10 reasons why Tax Relief should not get reduced:

1. Double taxation is fundamentally unfair. Without tax relief, you will be end up being taxed twice on the same income; once when you get paid and later in life when you draw your pension.

2. It rewards people for saving for their retirement. With average life expectancy now at 78 for men and 82 for women and rising all the time, it is critical people are encouraged to save now to fund a longer retirement.

3. It will potentially undermine the introduction of auto-enrolment this year which marks the biggest pro-savings initiative ever launched by a government. At the very point an estimated one million people will begin to be 'nudged' into saving, the government will be reducing the incentives and sending the signal that pension saving is not as important coalition politics.

4. It will completely undermine this government's claim to be a champion of personal responsibility. Hard-working responsible citizens who are saving for their future so they are not a future burden on the state will basically be told they are wrong to be bothering.

5. It will attack middle income Britain and entrepreneurs. 4/5 of the people who benefit from Higher Rate Relief earn between £42k - £107k. Any reduction in the lifetime allowance will disproportionately hit entrepreneurs who will find it very difficult to build up their pension pot when their business is successful without risking paying a punitive tax rate of 55% if the lifetime allowance is exceeded.

6. It will not raise the sums claimed. Last year's reduction in the lifetime and annual allowance has already brought the government a gain of £4.5 billion. A further reduction in the annual allowance will raise significantly less and reduce overall pensions savings by far more than the government saves. In particular, it will make pension saving much less flexible for entrepreneurs or those approaching retirement who want to increase their pension pot rapidly.

7. It will limit the insurance industry's ability drive growth in the UK economy. Last year's changes alone reduced total annual pensions saving by 10%. At a time when looming EU solvency rules already risk reducing retirement funds available for long-term investment, another attack on pensions will limit the insurance industry's ability to invest in the Government's priorities of infrastructure and economic growth.

8. It is completely contrary to what George Osborne promised in the run up to the election. In 2010, ahead of the general election, Mr Osborne promised to create 'a nation of savers' saying "We need to head in a completely new direction...We have to move to a new model of economic growth that is rooted in more investment, more savings and higher exports." Attacking pension savings at this time returns us to the days of Gordon Brown and will reduce the amount available for insurers to invest, reduce personal saving and damage one of the UK's leading export industries.

9. It leaves this country dangerously vulnerable to future crises. The OBR - set up by this government - has predicted that the UK's ageing population will cost 27% of GDP within 50 years which demands a significant increase in private pension saving if much higher taxes are to be avoided. The Chancellor has also repeatedly stated that the UK's low savings rate contributed to UK's vulnerability to the financial crisis. Any further changes to pension relief would reduce the UK's savings-debt ratio, not increase it.

10. It returns us to the pattern of constant and complex changes to pension planning which George Osborne promised to stop. The previous Labour government introduced seven different changes to pensions over a decade and in 2009, George Osborne promised "Encouraging saving through the tax system will be a central task for the next Conservative government. We can start by avoiding the uncertainty and damage caused by unpredictable and rushed changes to the tax system." Further changes now will mean the government has changed tax relief structures twice in the space of a year.

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