Will The Chancellor Raid Pensions?

20 March 2017

pensions sign Chancellor Philip Hammond hasn't had the best of times of it recently. Forced to reverse a planned tax on the self-employed from his Budget, this has left his plans seriously underfunded and he desperately needs to raise money elsewhere. According to the Sunday Times, it is believed that the Chancellor is now considering pensions as the top of his list to raise vital funds.

A source close to Hammond told the Sunday Times that pensions were 'at the top of the list' when considering how to raise the £2 billion.

"That's what is being talked about. What else is there? There isn't much else. What else can you do? He's not going to compromise the government's reputation on fiscal integrity and we're not going to be borrowing more. That's very clear," they said.

However, the former Pensions Minister Baroness Altmann has warned against such a move.

"You have to remember that George Osborne was very nervous about this because it affects core Conservative voters. It also potentially hits public sector workers so it can cause problems there. So the Chancellor really does need to tread very carefully with this."

But she also accepted that "he does not have many options" available to him. In her opinion, the easiest way to help raise the money would be to reduce the threshold where pension tax relief applied from the first £40,000 to the UK average salary of £25,000. "I think this would claw back about £1.5 billion which almost covers what he needs to find."

Other parties have attached the idea too, the first of which being UKIP with their pensions spokesman Andrew Charalambos declaring:

"Rather than attacking hard-pressed pensioners and workers saving for a pension to pay for his own mistake, he should take it from the expanding foreign aid budget."

Quite what the Chancellor will finally do to close the gap in his budget caused by his forced u-turn is still unclear but what is clear is that he risks upsetting much of the core Tory vote if he doesn't proceed with the utmost caution.

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    • Sp avatar Rupert Wynne

      Rupert is Smart Pension's marketing team manager. Working across all marketing verticals to support the business's growing requ…