The head of one of the largest pension firms in Britain has hit out at the Chancellor ahead of tax raids which could turn people away from saving for retirement.
Antonio Simoes, who took over at the helm of Legal & General at the beginning of this year, said savers needed “stability” to convince them to lock their money away long-term.
His call comes amid growing speculation that Rachel Reeves is looking to target pension savings in her October Budget – just weeks after the Prime Minister told Britons to brace for “painful” decisions.
And in another blow for older Britons after their Winter Fuel Payment cuts, Labour has ruled out raising income tax, VAT and corporation tax – but not pensions.
Legal & General boss Antonio Simoes has called on “more of the assets that are in the pension schemes to work harder for the UK economy”
LEGAL & GENERAL
One way of plugging the so-called “£22billion black hole” would be to slash the level of tax relief on pension contributions for higher-rate tax-payers, while another could be to cut the size of the tax-free lump sum which can be taken out.
Though Simoes has remained tight-lipped on specific policies he’d like to see, he said: “What’s important is stability.
“We need people to be investing more for their retirement – and if you keep on changing the incentives, there’s no stability.
“It’s important individuals are incentivised to lock their money away [and] that we create pools of long-term savings that can be invested in energy and other areas.”
PENSIONERS UNDER THREAT – READ MORE:
Labour has ruled out raising income tax, VAT and corporation tax – but NOT pensions
PA
Though more broadly, the Legal & General boss has called on “more of the assets that are in the pension schemes to work harder for the UK economy”.
And Simoes, in his capacity as a task force member advising Labour on its plans for a National Wealth Fund, will doubtless leave his mark on Treasury policy.
Legal & General currently holds over £1trillion of assets under its umbrella, while in the UK, it manages more than 5.3 million people’s pensions in a fund collectively worth around £146billion.
Simoes added: “We want to see stability and we want to encourage long-term savings and productive finance.
“We want more of this money to then be invested in the real economy.”
Antonio Simoes hit out at Rachel Reeves’s pension plan
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He said his firm was “very supportive” of stability and “incentives for people to do that” – and his calls followed similar statements from other pension firm bosses, six of which have already told Reeves about the dangers of a pension raid.
One, Aviva boss Amanda Blanc, also urged ministers to exercise caution about changing pension tax relief and the long-term impacts that could have.
Though City bosses have raised the alarm, the Institute for Fiscal Studies think tank has urged the Chancellor to carry out a £2billion raid on wealthy savers’ pension pots by cutting the amount which can be withdrawn as a tax-free lump sum.
The IFS has also called for pensions to be subject to inheritance tax – and for National Insurance to be levied on employer contributions to pensions.
But it has warned against reducing income tax relief on pension contributions for higher-rate earners, calling such a move “damaging, complex and inequitable”.
