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Aviva chief executive Amanda Blanc has sounded the alarm over a possible Labour Party raid on pension savers, urging the Government to be wary of the long-term consequences.
Chancellor of the Exchequer Rachel Reeves has warned she faces tough decisions in her first budget in October after identifying a £22bn black hole in the public finances that she says the Conservatives left behind.
This has sparked speculation about tax raids, including cutting pension tax relief for higher earners.
But Blanc, speaking as Aviva published its half-year results, warned that Reeves should think twice before doing so.
Hands off: Aviva boss Amanda Blanc has warned Chancellor Rachel Reeves should think twice before raiding workers’ pensions
He stressed the importance of encouraging workers to save into pensions – of which Aviva is a major provider – so that they are less dependent on the state.
Increasing pension savings will also mean more money to invest in the UK, he added.
Blanc said: ‘On the pension tax relief, I think we should just point out that if we really want people to save for the long term, pensions are a long-term game, they are not something you do today and it has no consequences in five, ten, fifteen or twenty years.
“The only thing we would say is that the Government is thinking about the long-term impact.”
A change in the tax relief system for those who deposit money in pension funds is one option that officials are considering.
Workers receive relief of 20 percent for those paying the basic rate and 40 or 45 percent for those paying the higher rate. There is speculation that Reeves could limit relief for those paying the 40 and 45 percent rate.
Analysis by AJ Bell has suggested this could mean millions of savers on higher interest rates would have to save for four more years to build up their pension pots to the same level.
It is one of several moves that could be on the table.
Reeves has also hinted that he could raise capital gains tax. Another option could be to increase fuel tax. Blanc, however, was more positive about the overall outlook for the UK.
“There are many reasons to be positive, including greater economic stability and political certainty,” he said.
‘We’ve been around the world talking to investors and the feedback is that they are much more interested in the UK now than they were two years ago.
“We have to be optimistic about the future of the United Kingdom.”
Blanc said the recent unrest had not dampened that sentiment. “The fundamentals are actually very solid,” he said.
Aviva reported a 14 per cent rise in operating profit to £875m, beating analysts’ expectations of £830m.
Blanc said he would launch a long-term asset fund for unlisted growth companies in the second half of this year.
Analysts at brokerage Jefferies said: “Aviva continues to demonstrate strong performance relative to its targets.” The shares rose 0.7 percent, or 3.2 pence, to 491.8 pence and are up 13 percent this year.
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