Ahead of a debate in Parliament this week, the NAPF says that although these proposals are aimed at the UK’s 230,000 highest earners, the impact is likely to be felt by more modest earners in the medium term.
The NAPF has concerns that having broken the principle on which pensions have been based for higher earners, there is a risk that future Governments will make the same changes for lower income earners.
It says the proposals also break the tax simplification framework, introduced by the Government in 2006 and says the constant changes to legislation can do nothing but undermine scheme sponsor confidence in pensions.
The NAPF has also expressed doubts that the Budget measures will raise the £3.1bn in additional tax revenue HM Treasury predicts as individuals seek more tax efficient ways to save and companies look to new ways to reward higher paid staff.
NAPF chief executive Joanne Segars says: “The Budget changes send out the wrong messages on pension saving. The Government must think again about the wider impact of the new measures as the changes are likely to affect more than just top-rate tax payers.
“The Government’s proposals break a long established principle tax policy in this country and the constant instability in legislation does nothing to help rebuild badly needed confidence in pensions.”