There are three things to note. First, the lower half of the income distribution (broadly earning less than £24,000 pa in the year in question) get 10% of all pension tax relief.
The so-called middle-income earners (earning £24,000 to about £54,000 in that year) enjoy 40% of tax reliefs.
And the top 10% of earners, all earning over £54,000 pa) enjoy 50% of all tax relief.
In other words, tax relief for those best off – which is nothing more than a straightforward state subsidy for their savings which increases the wealth divide in the UK as a result – costs £27 billion a year.
Ahhhh. Well, you see, there’s this lifetime thing? Pensions savings are made over a working lifetime. And wages change over a working lifetime. It’s not exactly unusual that older people make more money than younger. Which is why we do adjust for age when considering income at times.
We’ve also the fat that pensions are indeed part of that wealth divide. But then we also nee to consider lifetime effects. The 21 year old just starting work has no pensions savings. The 65 year old just retiring has the most he’s every going to have. We thus really o need to look at age adjusted incomes and age adjusted wealth.
But the Senior Lecturer doesn’t know enough economics to know this, does he?