Hands Off Our Pensions: George Osborne urged to honour pledge to reverse Gordon Brown's £5bn a year pension tax raid A survey in March 2010 found that four in five investors wanted the Chancellor to restore the dividend tax credit, which deprives pension funds of £5billion a year. Last night campaigners urged Mr Osborne to stick with his pledge. Malcolm Small, Senior Adviser on Pensions Policy at the Institute of Directors, said: "The Chancellor pledged in 2009 to reverse Gordon Brown's tax grab on pension funds, which are worth £8 billion annually to the Exchequer. This has yet to happen, and it would be damaging if he was to abandon a key promise on such an important issue. As well as the direct taxes on pension contributions, pensioners pay substantial amounts of tax in retirement - those burdens must be reduced if we are to restore public faith in retirement saving. It is always tempting for Governments to view pensions as an easy source of income, but in the long run it backfires if retirees end up relying on the state because their own savings have been eroded by tax. Matthew Sinclair, Chief Executive of the TaxPayers" Alliance said: "When he was Shadow Chancellor George Osborne pledged to reverse Gordon Brown's assault on pension funds and now that he is Chancellor he must not forget his promise. But his Autumn Statement shows that he is just as willing to raid our pensions for cash. Easing the burden on households and savers should be at the heart of his policy to kickstart the economy, not put on hold until it improves of its own accord. Joanne Segars, chief executive of the National Association of Pension Funds, added: "Pension funds in the private sector have come under huge pressure in the past decade, and it would be good to see this damaging policy unpicked one day. The Government has to do much more to support good workplace pensions. To boost public confidence in saving into a pension we need a period of stability, particularly as several million people are starting to be automatically enrolled into a pension. While the Government needs to get on top of the deficit, it is also essential that it stops meddling with pensions, especially tax relief. Up until the 1997 Budget, pension funds received a tax credit of 20 per cent on dividends received from British companies. This was to offset corporation tax already paid by companies on their profits. Dividends were assumed to be net of income tax, but pension funds (and charities) were exempt so received money back as a tax credit. Treasury sources indicated last night that the pledge was unlikely to be fulfilled. They insisted that other action, such as reducing corporation tax and helping lower-paid workers, had helped compensate for the removal of the pension tax perk by Gordon Brown.