Osborne urged on pensions relief

Industry experts have called on Chancellor George Osborne to resist the temptation of treating pensions 'like an ATM' amid speculation that his Budget could contain a tax raid on them.

Higher-rate taxpayers currently receive a Government tax relief contribution of 40p for every 60p saved in a pension, making it up to £1, but reports have suggested this figure could be cut to 20p.

Treasury Chief Secretary Danny Alexander said last month that more than £7 billion could be saved by reducing higher-rate tax relief to 20p as well as claiming that it would make the system fairer.

However, Tom McPhail, head of pensions research at Hargreaves Lansdown, said: 'The Government should leave pensions alone. Better still, it should give a commitment that it will leave pensions alone for at least the remainder of this parliament and it should call on the opposition to form a consensus that pension taxation is off the agenda for the next 10 years.

'This year marks the start of auto-enrolment. If it fails then there is no hope left for the UK's retirement provision. The Government should resist the temptation to treat pensions like an ATM - what we need is a period of stability.'

Pensioners have been faced with high living costs at a time when they are receiving little return on their savings and new retirees are finding annuity rates, which set the size of a pension for life, have been hit by quantitative easing.

Copyright Press Association 2012