A new analysis has found that two thirds of higher rate taxpayers will face a \u201cretirement crisis\u201d if George Osborne pushes ahead with the Government\u2019s pensions tax raid.<\/p>\n
The Chancellor has revealed potential plans to end generous rebates for higher-rate taxpayers on pension contributions, replacing them with a new flat rate of relief \u2013 which could be as low as 20%.<\/p>\n
But recent analysis has found that two thirds of higher rate taxpayers \u2013 or around 3.2 million people \u2013 are not currently saving anywhere near enough for their retirement.<\/p>\n
The analysis found that Osborne\u2019s decision to scrap a higher rate tax relief on pension contributions would undoubtedly \u201cpenalise\u201d higher-rate savers.<\/p>\n
Experts have speculated that the decision could also further discourage savers from side-lining spare cash for their later years.<\/p>\n
Under the current system, basic-rate taxpayers receive a \u00a320 top-up from the Government for every \u00a380 they pay into a pension.<\/p>\n
Those earning more than \u00a342,385 are classed as \u201chigher-rate taxpayers\u201d, and receive \u00a340 for every \u00a360, while top-rate taxpayers receive \u00a345 for every \u00a355.<\/p>\n
Under Osborne\u2019s proposed flat rate relief of 20% for all, savers will receive \u00a325 for every \u00a375 they contribute \u2013 in a move expected to save the Treasury approximately \u00a36 billion.<\/p>\n
However, Conservative MPs are increasingly concerned that the move would damage their constituents and core supporters.<\/p>\n
Sir Alan Duncan, a former minister, said: “What is really important for the future is that we have stability, no retrospective adjustments and a system that encourages people to put a lot of money away for the future.<\/p>\n
“You can’t plan for a pension if you are halfway through doing it and someone pulls the rug from beneath you.”<\/p>\n
Tory MPs have warned Mr Osborne that he will face a “riot” if he pushes ahead with the proposed plans.<\/p>\n
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