The government risks a “pensions implosion” if it gets its way on pensions tax relief, the outgoing National Association of Pension Funds (NAPF) chairman has warned.
Speaking at the NAPF Annual Conference and Exhibition in Manchester, Ruston Smith (pictured) urged the government not to gamble savers’ long-term interests for short-term gain, saying proposals to create a more ISA-like tax regime had an “ulterior motive” to increase short-term tax revenue for the Treasury.
The government recently consulted with the industry on radically changing the way pensions are taxed so that savers’ contributions are taxed, known as ‘taxed-exempt-exempt’ (TEE), rather than the current model where savers’ withdrawals are taxed, ‘exempt-exempt-taxed’ (EET).
Smith, who is also group pensions and insurable risk director at Tesco, said: “The government says it wants to strengthen the incentive to save – but its ulterior motive is to increase short-term tax revenue.
“Tax change that could literally dig up and smash the foundations set to create a society of lifetime savers putting pressure back on our ageing society.
“And if the government gets its way on reforms to pensions tax relief, we could see the recent wave of change the pensions revolution becoming a pensions implosion.”
Smith added: “So our critical role as the social conscience and savers’ champion must continue to get the best outcomes and not just accept short-term change to overcome short-term challenge.”
Smith will hand over the NAPF chairmanship to Lesley Williams, group pensions director at Whitbread, at the trade body’s AGM on Friday.
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