Mombers, in the comments to Lola's recent post about pensions and savings:
"Surely the purpose of any incentives is to provide enough private income to prevent OAPs becoming a burden on the state? If so, it doesn't matter what the person's income in their working life was. That said, I am a bit miffed that my enormous tax relief is all but certain to be cut :-("
My response, as tidied up:
M, yes that is how they always justify it but it is complete and utter horseshit.
Cost to the taxpayer of basic state pension = £50 billion a year.
Cost to the taxpayer of second state pension = £40 billion.
Cost to the taxpayer of top-up payments of Pensions Credit, Housing Benefit and Council Tax Benefit for pensioners with no SSP or private pension = approx. £15 billion.
Cost/value of pensions tax breaks = £40 billion.
Of necessity, a lower tax burden on income channelled into private pensions = higher tax rates on everybody/everything else.
Number of pensioners currently NOT claiming top up benefits who would be claiming them if it hadn't been for pensions tax breaks = very, very few indeed.
Saving to the taxpayer from not having to support these very, very few pensioners = a very, very small amount.
So they are spending/overtaxing by £40 billion a year to save the self-same taxpayer £5 or £10 billion at most.
That is fucking awful value for money, targeted at the wrong people and imposing higher tax rates on everybody/everything else.