RUTH SUNDERLAND: This folly on pensions is straight from her mentor Gordon Brown’s playbook

The art of taxation, according to Jean-Baptiste Colbert, Louis XIV’s finance minister, is to pluck the maximum number of feathers from the goose while provoking a minimum of hissing.

This is the effect Chancellor Rachel Reeves hopes to achieve by attacking ‘salary sacrifice’ pension schemes in the Budget. Many have never heard of salary sacrifice and find retirement finances insurmountable. So he probably thinks he can do it without overly loud hissing.

Not if I can help it. This unjust madness needs to be shouted – not bellowed – from the rooftops.

In the long term, this is likely to be a disaster for retirement savings on the scale of Gordon Brown’s 1997 blunder; This was when Reeves’ Labor predecessor chancellor helped destroy the UK’s gold-plated final salary pension system (once the envy of the world) by canceling dividend tax relief for pension funds.

With salary sacrifice, employees give up part of their gross salary which goes directly into their pension before tax and National Insurance (NI) are deducted. Employers also save money on NI.

Reeves is reducing the annual limit from £60,000 to just £2,000 for this. Employees and companies will have to pay NI for anything they put into their pensions above this figure.

The move will raise £4.7bn when it is eventually implemented. But this would also be false economics, with dire long-term consequences.

The Chancellor shrewdly hinted on Wednesday that pay sacrifice was essentially a niche part of the system used by the city’s fat cats to shield their bonuses from tax and NI.

But this is far from the truth. Salary sacrifice is widely used by mainstream companies and ordinary employees across the country.

Setting the cap at £2,000 could easily impact workers on decent salaries, for example £40,000 a year. The idea that this will only harm those with broad shoulders is completely false.

The only silver lining in the statement is that this pension hit will be delayed until 2029. By then, there may be a chancellor smart enough to consign this utter stupidity to the oblivion it deserves.

Considering Gordon Brown as a role model, Reeves hung a framed picture of him on his bedroom wall when he was a student. But he couldn’t have chosen a worse example to copy from his mentor by pointing his guns at pensions.

This move will leave people much worse off when they retire – if they can afford to do so.

Asset management firm AJ Bell found that a 35-year-old earning £40,000 a year could be £20,101 poorer at retirement age, assuming current retirement savings are £30,000 and annual investment growth is 5 per cent.

The figures also assume that the person contributes five percent of their salary and their employer puts in three percent.

Under the current system, a 35-year-old earning £50,000 and sacrificing salary could expect to earn £564,113 by the age of 65. Under the plans, their final pot will be £542,053, leaving them £22,060 worse off.

On the same basis, anyone earning £75,000 a year who sacrificed salary could be £37,201 worse off in retirement.

It doesn’t take a genius to predict that this will deter individuals from saving and discourage companies from offering affordable retirement plans.

Indeed, a survey of 2,050 people by the Association of British Insurers (ABI) found that nearly 40 per cent of workers said they would save less in their pensions if these plans were introduced.

Asset management firm AJ Bell found that a 35-year-old earning £40,000 a year could be £20,101 poorer at retirement age, assuming current retirement savings are £30,000 and annual investment growth is 5 per cent.

An estimated 14.6 million people are saving too little for retirement. Experts say the proposals would impose a new tax on business and deter workers from saving for the future.

This is a terrible decision by Reeves and don’t take it from me. That’s no less than the boss of insurance giant Aviva, Dame Amanda Blanc, who warned the chancellor earlier this month that it would be ‘bad news for the UK’.

As Blanc says, the message it sends is dire: that putting money into pensions is a bad idea.

The salary sacrifice is just the latest in a series of negatives that Reeves intends to lash out at pension savers trying to do the right thing. It creates distrust and discourages common sense.

The Chancellor seems to have been fed by the politics of envy, where people trying to make a home for themselves are not admired as role models, but are seen as targets. It’s easy for Labor MPs, who benefit from gold-plated pensions along with the rest of the public sector, to think this way.

Unlike those of us who work in the private – productive – part of the economy, the vast majority of government employees are guaranteed a lifetime income thanks to these programs, which puts them in an extremely privileged position. They don’t have to worry about whether the stock market is going up or down.

And as a result, they are becoming an increasingly unsustainable burden on taxpayers.

Liabilities relating to these unfunded public sector pensions are estimated by the Treasury Office for Budget Responsibility to be a staggering £1.4 trillion. The cost of salary sacrifice is dwarfed by these huge state pension obligations.

But instead of tackling the scandal, Reeves chose the easy option of attacking ordinary savers and appeasing Labour’s union supporters.

Making salary sacrifices will deal another blow to companies reeling from NI rises, minimum wage hikes and Angela Rayner’s upcoming ‘workers’ rights’ bill.

How can we deliver growth with a chancellor who makes employers less willing to hire?

It will be young people, not the elderly, who will suffer the most from Reeves’ anti-retirement revenge. They are the ones who will be deprived of a tax-friendly environment that encourages them to save in the future.

It is feared that Reeves will follow in Gordon Brown’s footsteps and cause irreversible damage to the entire retirement savings system.

I fear that Reeves will follow in the footsteps of his own disastrous pension-destroying Brown, causing irreversible damage to the entire retirement savings system.

A £5bn-a-year tax raid on pension fund dividends in 1997 ultimately left millions of Britons facing a poorer old age. Now Reeves seems determined to finish what he started.

By seizing central Britain’s pension savings, the Chancellor will also deplete a pool of capital that could be used to fund infrastructure and innovation; This is another of his stated goals. The decline in investment will accumulate or increase cumulatively with each passing year until it becomes impossible to fill the gap.

And by pickpocketing future generations of retirees, they rack up even greater welfare costs in the decades to come; Because those who cannot save enough to support themselves turn to the state.

Back to Jean-Baptiste Colbert: In his attacks on pensions, Reeves isn’t just plucking feathers, he’s killing the goose that lays the golden eggs.