Tenet and 2plan CEOs attack Lib Dem pension plans

The chief executives of 2plan Wealth Management and Tenet Group are among the senior figures at five major financial advice firms to attack the Liberal Democrats' pension plans.

In an open letter, Chris Smallwood, chief executive at national IFA 2plan, and Simon Hudson, CEO at IFA support group Tenet, branded the party's plans to restrict tax relief on pensions to the 20% basic rate of income tax "ill-judged and irresponsible".

Smallwood and Hudson were joined as signatories by AWD Chase de Vere director Martyn Laverick, Asset Management IFA founder and director Richard Carne, and Bottriell Adams partner Gary Bottriell.

In the letter to the Sunday Telegraph, the senior figures poured scorn on the Lib Dems' proposals, saying they would also hurt those on lower and average incomes and could be the "death knell" for final salary pensions schemes.

"We believe the Liberal Democrats' [manifesto pledge] will deal a blow to our private pensions saving system every bit as damaging as Gordon Brown's decision to remove tax credits from share dividends," the letter states.

"It amounts to a tax increase on people's retirement savings of £5.5bn a year."

The Lib Dem pledge, the cornerstone of their plans to cut the deficit, would affect taxpayers earning between £43,785 and £150,000. Higher rate taxpayers currently enjoy 40% tax relief on pension payments.

But the five signatories argue the priority now is to encourage people to save for their future, "not punish them for it".

"This tax increase threatens to undermine our savings culture, and threatens to be the death knell to final-salary pensions schemes," they state.

A Lib Dem spokesman said: "Nine out of 10 people don't pay the higher rate of tax, yet those who do get almost two thirds of all the tax relief.

"The Liberal Democrats think it is fundamentally unfair that those at the top should get more relief on their pensions than everyone else."

The Letter in full

SIR - Over the coming decades, our society will face an unprecedented increase in the number of people of pension age. This demographic change poses a huge challenge to our society. With the public finances under strain, it is more important than ever to encourage people to save for their pensions so that they can enjoy a more secure future.

As independent financial advisers, we are responsible for advising people on how they can best prepare for their retirement. As our society grows older, our country needs a well-functioning pensions market that will encourage and reward saving for everyone, providing security for our pensioners and encouraging people to prepare for their future.

We believe that the Liberal Democrats' manifesto pledge to restrict tax relief on pensions to the basic rate of income tax is particularly ill-judged and irresponsible, and will hurt people on lower and average incomes, not just those on salaries above the higher-rate threshold. It will deal a blow to our private pensions saving system every bit as damaging as Gordon Brown's decision to remove tax credits from share dividends. It amounts to a tax increase on people's retirement savings of £5.5 billion a year.

At a time when we should be encouraging people to save for their future, this tax increase threatens to undermine our savings culture, and threatens to be the death knell to final-salary pensions schemes.

Millions of people want to save for their retirement. We should encourage them to do so, not punish them for it.

Simon Hudson
CEO, Tenet Group
Gary Bottriell
Partner, Bottriell Adams
Richard Carne
Founder and Director, Asset Management IFA Ltd
Martyn Laverick
Director, AWD Chase de Vere
Chris Smallwood
CEO, 2plan