Pension tax raid risks disrupting retirement for millions, Reeves warned
A tax raid on pensions by Rachel Reeves could risk disrupting the retirement plans for millions of workers, the boss of Aviva has said.
Dame Amanda Blanc warned the Chancellor against implementing a cut to pension tax relief, which is reportedly under consideration as the Treasury tries to plug an alleged £22bn black hole in the public finances.
Proposed money-saving measures include a flat rate of tax relief at 30p in the pound, meaning higher-rate payers would face an effective 10pc tax charge on their retirement contributions.
The move would help the Government reduce its overall tax relief bill, which rose to £48.7bn last year.
Dame Amanda, who runs an insurance company that manages £180bn of assets, urged the Government to consider the long-term impact of tax raids on pension savers.
She said: “On pensions tax relief specifically, we would just caution that if you really want people to save for the long term, pensions are a long-term game.
“They are not something that you do something with today and then don’t have consequences in five, 10, 15, 20 years’ time. All we would say about anything that happens is that any government thinks about long-term impacts of policies.”
Dame Amanda, who became chief executive of Aviva in 2020, stressed that it is important to encourage people to save into their pensions.
She added: “We think pensions have a big role to play in terms of protecting individuals. If they are saving up, they are not reliant on the state in later life.”
She also noted the investment opportunities attached to auto-enrolment schemes, which automatically sign up employees to a workplace pension.
Labour is preparing to review the adequacy of the nation’s pensions, which could include asking millions of workers to increase their pension contributions above the current level of 8pc of their salaries.
Dame Amanda said: “Auto‑enrolment today is £500bn. By 2030, it will be about £1.2 trillion. If a proportion of that is invested in investments in the UK, that will clearly deliver for pension holders and the UK.”
Her comments came as the FTSE 100 insurance giant, which also has operations in Canada, posted higher-than-expected half-year profits.
Aviva recorded £875m in operating profit over the past six months, up 14pc on the same period last year.
This performance was driven by increased underwriting across the UK and Ireland, which boosted total general insurance premiums to 15pc to £6bn.
The London-listed company, which has more than 19m customers, added that premiums grew as a result of “strong pricing discipline in the inflationary environment”.
Insurers have sharply raised prices for motor and home coverage in recent years to offset increased costs of insurance claims.
Dame Amanda also described the UK market as “highly attractive and growing” as a result of economic and political stability.
She said: “We see many reasons to invest here including significant investable wealth, sound regulation, greater economic stability and political certainty, and numerous structural growth opportunities.”