Hands off our pensions! Reeves told amid panic over a budget tax raid on retirement pots
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Rachel Reeves has been urged to rule out a further tax raid on pensions for the rest of this Parliament to avoid a repeat of the panic over her first Budget. In a powerful intervention on behalf of those saving for retirement, ex-pensions ministers lined up with industry chiefs to seek reassurance from the Chancellor.
They told the Mail certainty was needed – after rumours of tax changes in Labour’s first Budget for 14 years triggered a rush to withdraw cash from pensions. Former pensions minister Steve Webb said ‘constant speculation’ about changes to pension taxes was ‘highly damaging’.
And writing in the Mail, AJ Bell chief executive Michael Summersgill called on Reeves to commit to a ‘Pensions Tax Lock’ that promises ‘not to mess with the fundamentals of the pension tax system in this Parliament’. Ahead of the Budget in October, speculation mounted that Reeves was planning a tax raid on pension pots as she struggled to make her numbers add up.
Under fire: Chancellor Rachel Reeves (pictured) has been urged to rule out a further tax raid on pensions for the rest of this Parliament. Among the options were cutting tax relief on the pension contributions of higher earners and slashing the amount savers can withdraw tax-free at the age of 55 from £268,275 to £100,000.
The threat to the tax-free lump sum proved particularly damaging as savers rushed to withdraw cash from their pension pots, despite warnings it would leave them worse off in retirement. Reeves finally decided against such a move – but instead introduced a new death duty by dragging pension pots into inheritance tax for the first time.
