Norwich Union, the UK’s largest insurer, is calling on the UK Treasury to scrap what it calls “the latest stealth tax proposals.”
Under plans announced in the pre-Budget statement on 2 December, the tax payable on the free reserves supporting with-profits policyholder funds will be increased. Norwich Union says this could limit the freedom of these funds to invest in equities, which are likely to offer better long-term investment prospects, and so negatively impact with-profits savings policies.
“This is simply a piggy bank raid on the funds which support our customers savings policies – there is no other description for it,” says Gary Withers, chief executive of Norwich Union Life. “While this may look like a tax on the company, it is essentially a policyholder tax. This proposal seems completely inappropriate at a time when we are trying to rebuild trust in the savings industry and get people to save. It is very difficult to see how this is consistent with the principle of treating customers fairly which is actively promoted by the FSA and Government. There has been no warning of this proposal whatsoever and we are calling on the Treasury to scrap this latest proposal.”