Aviva chief warns Reeves against raid on pensions savings

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insurance giant, warned Treasury officials to “think carefully” before cutting incentives on the tax breaks offered on workplace pensions, adding that it could discourage workers from saving for their retirement.Ms Blanc said that “penalising those employers that actually contribute more” to staff pensions would be “bad news long-term for the UK”.The Telegraph revealed last month that the Treasury was considering trimming the tax breaks offered to people who make extra savings through their company pensions.These salary sacrifice schemes allow workers to put money into their retirement pots before it is subject to any income tax or National Insurance.Companies also benefit from lower employer National Insurance contributions when staff make savings through salary sacrifice, because the tax is only levied on pay left over after pension contributions.Ms Reeves is considering capping the National Insurance relief for both staff and their employers.Ms Blanc said the speculation around the Budget was “clearly unhelpful” and called on the government to “think carefully” before making changes.“It could make employees think about how much they may salary sacrifice,” she said. “If you use the government’s own research, it suggests 15 million people in the UK will not have enough money to retire well.“For the UK, I don’t think that changing things like that on long-term pensions is a very good thing at all.”Someone on the UK median wage of £35,000 per year who added 5pc of their wages into a pension pot through salary sacrifice, would pay an extra £210 in National Insurance if the benefit was cancelled.A cap on tax relief of £2,000 is understood to be the most likely proposal under consideration. Such a change is expected to raise about £2bn per year for the Exchequer.Ms Blanc’s comments came as Aviva reported on its third quarter performance. The insurance giant said it expected to deliver £2.2bn in operating profit this year. It added that a £100m cost-cutting programme at Direct Line had been completed three months ahead of schedule and said it now believed it could save as much as £350m following the takeover.However, it disclosed a fall in sales in its retirement division. Shares fell by 5.5pc.Try full access to The Telegraph free today. 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