£10 bn pension subsidy goes to top 1% of UK income earners

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The UK is having a pension debate. It needs one. I have long been involved in this issue.

The TUC makes a new contribution today. In the face of massive criticism of public sector pensions it points out that the average pension in this sector is just £7,000 a year.

Those who really make a killing from state subsidy of pensions are another group altogether — the 1% of the UK who earn more than £150,000 a year. They’ve been enjoying a pension subsidy of £10 billion a year.

The numbers are in the right ball park — and I’d stress, they are historic. Read more here.

For me the key issue is this: why do we give tax relief (enormous tax relief in this case) to those who do not need it? I know some limits are being imposed, but face reality: if you earn £150,000 you do not need any tax relief to save. You do not need tax relief to give to charity. You do not need incentives to invest.

50% tax should mean 50% tax for these people. They can afford it and still live incredibly well. And if we eliminated all their reliefs we’d have most of the tax needed to pay for the bail out.

I cal that a good deal. 

And 99% of the UK would be unaffected.