Pension relief 'should be removed'

Well-off savers should have higher-rate tax relief on pensions removed, Treasury chief secretary Danny Alexander has said.

The rich are receiving disproportionate benefits from the tax break, according to the Liberal Democrat.

His comments may put more pressure on Chancellor George Osborne to target the wealthy in March's Budget.

More than £7 billion could be saved if tax relief was reduced from 40 per cent to 20 per cent, and the system would be fairer, Mr Alexander said.

The politician told the Daily Telegraph: "If you look at the amount of money that we spend on pensions tax relief, which is very significant, the majority of that money goes to paying tax relief at the higher rate."

At the Liberal Democrat spring conference in March, party activists are expected to pass a motion which will call for tax relief cuts for higher-rate savers.

Mr Alexander suggested he would vote for the motion. He said: "I'm willing to study that motion but I dare say I will".

Copyright Press Association 2012