Royal London warns chancellor over pension tax system plans
SAVINGS group Royal London yesterday warned that proposals to tax pension contributions risked putting people off saving while also driving up costs for the industry.
The Treasury launched a consultation on pensions tax relief last month to see whether it should install an ISA-style system and tax money paid into pension pots upfront.
Pension payments are currently untaxed when paid in and then taxed when paid out.
Royal London’s chief executive Phil Loney said there was no evidence the idea would drive people to save more.
“We think it’s a very high risk proposal,” Loney told Morning Wire “We fear a reduction in the amount people save for retirement at a time when people are not saving enough anyway.”
He added the plan would create a dual savings system with current savers owning two pension pots, one taxed and the other untaxed, adding to the administration costs for firms selling pensions.
Elsewhere, the company said group pension sales had risen nine per cent for the six months ending 30 June. Individual pension product sales also increased by 56 per cent to £947m.
The margin for new business also rose to two per cent compared with 1.1 per cent. Funds under management nudged up slightly during the period, rising one per cent to £83.4bn.