The Government has been warned cutting the annual allowance for tax-incentivised pension saving will hit small business owners and public sector workers.
Chancellor George Osborne (pictured) reportedly met with senior coalition members on Monday to discuss cutting pension tax relief for high earners as part of the autumn statement.
Osborne has previously pledged to balance welfare cuts with new taxes on the wealthy.
In February, when pre-Budget speculation suggested the Treasury was targeting cuts in pension tax relief, analysis from Standard Life revealed cutting the annual allowance from £50,000 to £40,000 would save the Treasury £600m. Reducing it to £30,000 would save between £1.6bn and £2bn.
Legal & General pensions strategy director Adrian Boulding says reducing the annual allowance would hit small business owners.
He says: “This would hit business owners trying to make pension provision in Sipps and SSASs because the nature of that sort of individual is they need to make irregular contributions.
“Business owners may go 10 or 15 years without paying anything in and then the business will allow them to make a sizeable contribution. These are the entrepreneurs we want to get the country back on its feet again and it looks like the Treasury wants to give them a kicking.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “I had a private conversation with a Government minister last week who assured me there is no way pension tax relief will be left alone in the autumn statement.”
Confederation of British Industry head of labour market policy Jim Bligh says: “This will hit head teachers and doctors and senior nurses who get big employer contributions in defined-benefit schemes.”
Tory MP and Treasury select committee member Mark Garnier says: “I would not start fiddling around with the pension system. Saving is good, taking responsibility for your own life is good and the Government needs to think carefully about anything that sends the wrong message.”