LONDON Dec 1 Britain's government should not
reduce the amount workers can pay tax-free into their pension
because it would deter future generations from saving for their
retirement, a UK pension trade body said on Saturday.
The National Association of Pension Funds (NAPF) has warned
British finance minister George Osborne to leave pension tax
alone ahead of his Autumn Statement n e xt week, which outlines
the government's plans for the economy.
Osborne is struggling to reduce the government's deficit
amid sluggish growth and may reveal plans to raid the pension
contributions of richer Britons in his address on Dec. 5.
Workers can currently pay up to 50,000 pounds a year into
their pension pots before it is taxed, but the NAPF believes the
government wants to cut this back to 30,000 pounds a year.
The UK government slashed this annual allowance from 255,000
pounds to 50,000 pounds in April 2011.
"If the Chancellor (of the Exchequer) goes ahead, it's not
just the rich who will be affected, but also middle earners,"
Joanne Segars, NAPF chief executive said in a statement.
The UK government has already increased the minimum
retirement age and reduced benefits for new workers in a bid to
ease the pressure on its finances.
Currently, millions of workers will be forced to work beyond
retirement or increase the amount they are saving, the NAPF said
The government is considering a new type of pension scheme
to encourage more people to save for retirement.
Meanwhile, the NAPF wants the government to make allowances
for UK pension funds to help alleviate the impact on their
coffers from repeated rounds of quantitative easing (QE) from
the Bank of England.
Over the last three years, 375 billion pounds of QE has
contributed to a sharp drop in the yield on British government
gilts - a staple investment for pension funds - increasing
workplace pension deficits by 90 billion pounds, the NAPF said.
The NAPF also wants the government to tweak mandates to
allow pensions funds to invest in infrastructure more
frequently, and to issue more long-dated and indexed-linked
gilts to help pension funds reduce their deficits.