Rachel Reeves’ pensions tax raid dangers ‘eroding dwelling requirements for hundreds of thousands of individuals in retirement’, Lord Blunkett warns

Rachel Reeves‘s pensions tax raid risks eroding living standards for millions of people in retirement, a former Labour minister warned last night.

Lord Blunkett, who served as work and pensions secretary under Sir Tony Blair, warned the Chancellor he would ‘advise strongly against’ imposing national insurance on employers’ pension contributions.

The measure, which is expected to be unveiled in Labour’s maiden Budget next Wednesday, is expected to raise £20billion and will reimburse public sector employers — including the National Health Service and government departments.

But in a letter to The Times, Lord Blunket — who helped introduce ‘automatic enrolment’ for pension schemes — described the move as ‘very worrying’ as it could lead to employers reducing pension contributions.

He added: ‘It is one thing to increase the rate of national insurance, and quite another to levy this on employer pension contributions.

A former Labour minister has warned that Rachel Reeves’s pensions tax raid risks eroding living standards for millions of people in retirement

Labour’s maiden Budget is set to be revealed next Wednesday (stock image)

Lord Blunkett, who served under Sir Tony Blair , warned the Chancellor he would ‘advise strongly against’ imposing national insurance on employers’ pension contributions

‘As the former work and pensions secretary of state, who signed off, with Tony Blair and Gordon Brown, the proposition of auto-enrolment — which recognised the genuine crisis, for generations to come, in maintaining living standards in retirement — I would advise strongly against this.’

Lord Blunkett also called for businesses to contribute more than the minimum 3 per cent of staff earnings into pension pots amid fears that many Britons are not saving enough for retirement.

According to recent government statistics, one in ten Britons are not saving enough to ensure a minimum income of about £14,000 a year.

However, former pensions minister Sir Steve Webb argues: ‘It is widely accepted that the UK has an ‘undersaving crisis’ — even the government estimates that around 12 million people are not saving enough for a decent retirement.

‘Increasing the cost to employers of providing good pensions will reduce the amount employers are willing to contribute, making the problem worse.’