Andrew Harrop, the general secretary of the Fabians, argued that reducing pension tax relief and redistributing it away from better-off earners is necessary. He highlighted that pension tax relief has become a costly burden on the government, significantly benefiting upper-rate taxpayers, while women only received a significantly smaller portion of these benefits, urging Rachel Reeves to consider these changes. He noted this could alleviate half of the 22bn shortfall the chancellor has identified.
The Fabian Society report detailed that tax relief on pension contributions rose by 55% from 2016-17 to 66bn in 2022-23, signifying a substantial increase in government expenditure on this program. Harrop pointed out that while upper- and top-rate taxpayers make up 19% of those paying pension tax, they receive a disproportionate 53% of the total tax relief, creating an inequitable system that exacerbates financial strain on public finances.
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