Norwich Union insurance praises Government about-face

New Government proposals branded a "piggy bank raid" on investors, savers, and pension holders have been shelved.

Norwich Union said certain measures contained in the Pre-Budget Report, described as "the closure of a tax loophole", would lower returns to policy holders and people with investment, pension, and with-profit policies. The Association of British Insurers (ABI) also attacked the plans.

"This is simply a piggy bank raid on the funds which support our customers' savings policies - there is no other description for it," said Gary Withers, chief executive of Norwich Union Life said of the proposals.

However, since these concerns were raised the Government said it will allow more time for consultation on these proposals and removed them from the new regulations now before Parliament.

The proposals will now be debated as part of next year's Finance Bill.

Mr Withers said: "We are very pleased that the Treasury has listened to our concerns by deferring these proposals.

"We look forward to getting involved in the consultation on this issue and remain committed to representing the interests of our policyholders."

The proposals would have seen free reserves on pension and life funds both taxed at 30 per cent. Currently these surplus assets are tax free on pension funds and taxed at 20 per cent for life funds.