From Mr Christopher Donald.

Sir, Whatever the outcome of the issue of pension contributions by high-salary earners, we should remind ourselves of the highly damaging effects of the Brown/Balls raid on pensions dating from their first Budget 15 years ago. The then chancellor, Gordon Brown, abolished the arrangement whereby tax credits on dividends of 10 per cent were recoverable by funds. This new “tax” was a direct attack on the thrift and prudence of those providing for their retirement whether via their employers or privately: their ignorance was most stealthfully exploited. The Treasury opposed the measure, over which there was no consultation, and which Mr Brown absurdly claimed would improve the productivity of industry.

This “tax” – it is suggested – has cost pension funds £100bn including compounded income and growth foregone. This loss has contributed to the closure of final salary schemes, to higher deficits and will lead to reduced pensions for millions of largely uninformed retirees. The measure has also backfired, given the need to fund deficits which will have cut corporation tax receipts. The action was above all highly discriminatory since most public sector pensions will not be affected – another unfairness in the treatment of the savings of those Mr Brown liked to call “hard-working families”.

Christopher Donald, Hexham, Northumberland, UK

Get alerts on Letter when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article