Response to HM Treasury’s Consultation Document Cm 9102 (Strengthening the incentive to save: a consultation on pensions tax relief)

History suggests that the present proposal to change the basis of pension taxation, moving from
an EET system with tax relief on pensions contributions and taxable pensions to a TEE system in
which contributions are taxed but pensions are tax-free, is likely over the long-term both to
reduce tax receipts and result in lower pensions in payment (thus in turn producing pressure for
higher state spending). The short- to medium-term tax revenue gained by the shift will, in short,
be vastly outweighed by the long-term costs.