An expected tax raid by Phillip Hammond in the Budget will widen the gap between the retirement funds of public and private sector workers, a report has warned.
Analysis for the Telegraph found stripping back tax relief on money saved into pensions would hit private sector workers significantly harder than their public sector equivalents, who already enjoy far more generous arrangements.
Not entirely sure how it works but I cam see that it will increase the inequality.
Currently, to get £y in pension a private sector worker, looking at a defined contributions pension, must save very much more than a public sector worker must make contributions into a defined benefits pension to gain that same £y pension. One reasonable estimate says that this makes public sector pay 30% higher than private sector. Pensions being, as the TUC says, just deferred pay.
Remove the tax relief on private s#pensions savings, but the public sector ones not being affected in the same manner, that gap widens.
Is that it? Or would an actual pensions expert like to explain this to us?