Pension experts have slammed Labour’s “very optimistic” plans to raise up to £1.3bn a year by cutting top rate pensions tax relief.
Labour is proposing to slash relief for those earning more than £150,000 from 45p to 20p to partly fund a compulsory jobs guarantee for the under-25s.
It estimates the cuts will raise between £900m and £1.3bn every tax year alongside a £2bn annual tax on bankers’ bonuses.
Annual pensions tax relief allowance is being cut from £50,000 to £40,000 next month while the lifetime allowance will drop from £1.5m to £1.25m.
Legal & General pensions strategy director Adrian Boulding says: “There is an element of double counting. The coalition plans to reduce the lifetime allowance to £1.25m so a large proportion earning north of £150,000 are caught.
“They will stop paying pension contributions before the next election so the savings have been booked. I’m dubious about the Labour figures.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “There are a lot of variables but the proposal looks very optimistic. Even if they pursue this misguided policy, will it produce the revenue they want? Probably not.”
Association of Chartered Certified Accountants head of taxation Chas Roy-Chaudury says: “In 2009, Labour was trying to save £3.5bn from the same policy but the coalition has done it other ways. I’m not sure how much is left.”