Chief secretary to the Treasury Danny Alexander has ruled out any more cuts to pension tax relief in this parliament but hinted the Liberal Democrats would go further in their next election manifesto.
In yesterday’s Autumn Statement, chancellor George Osborne cut the annual tax-free allowance from £50,000 to £40,000 and the lifetime allowance from £1.5m to £1.25m.
Speaking during a PoliticsHome Q&A on the Autumn Statement today, Alexander said the Government will not make any further changes.
He said: “We set out the plans as a Government yesterday and it is as far as we have agreed to go. The reduction in the lifetime allowance from £1.5m to £1.25m will affect the top 2 per cent of savers and going down from £50,000 to £40,000 will affect the top 1 per cent.
“The average pension pot in this country is £55,000 so for the vast majority of people this will have no impact at all.”
But Alexander suggested he would like to go further than the current cuts to relief as outlined in the 2010 Liberal Democrat election manifesto, which called for higher rate relief to be scrapped altogether.
He said: “We spend about £33bn for tax relief on pension contributions and 60 per cent goes to higher rate taxpayers so it is fair way to make sure the wealthiest in society make a contribution to the difficult challenges.
“As a Liberal Democrat we may well want to propose going further in our election manifesto, we certainly had suggestions of going further in 2010. But the Government policy was announced yesterday.”