A taxing time due for pensions

Rachel Reeves has had enough. These big investors with their fancy tax breaks and ungrateful attitude have pushed their luck once too often.

Here the Chancellor is trying to boost growth and the stock market – and what does she get in return from the City friends she worked so hard to woo?

She gets indifference, complaints about tax of any sort and endless threats to move abroad.

Worst of all, pension funds, that bedrock of stability that get tax breaks of about £50 billion a year are moving money out of the UK.

She tells her Treasury mandarins: I want the financial watchdogs to conduct an investigation into how pension funds would perform without their tax advantages.

How many of them, shorn of this generosity, would in fact lose money? How many would be shown to fund the lifestyles of pension fund managers, but not much else?

There is no sign of Rachel Reeves actually doing this, it’s my fantasy.

But she would scare the life out of the pension sector if she did.

They would have a massive PR problem. People might decide cash ISAs are easier and better.

A letter to the FT says:

“Strip out the tax savings and many pension products show lousy returns. If contributions were paid out of taxed income, product providers would have to pull their socks up.”

Indeed. Or they would have to concede that such a policy change would destroy them.

Better to play nice, to put money from UK investors into UK assets. Keep the tax break and the relatively good public standing.

Reeves 1 Pension Fund Managers 0.

She should do it.

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Simon.english@roxhillmedia.com