Reeves urged to introduce ‘pensions tax lock’ to protect Britons’ retirement
New research from AJ Bell reveals that a majority of Britons are supportive of a pensions “tax lock” ahead of next week’s autumn Budget.
Chancellor Rachel Reeves has been called to protect tax-free relief on retirement savings amid discontent over Labour’s policies impacting pensioners, namely the Winter Fuel Payment axe.
AJ Bell’s study found that 43 per cent of respondents backed the idea, with only 12 percent opposing it.
Support was particularly strong among those aged 55 and over, with more than half (51 per cent) in favour of the proposal.
The findings come as AJ Bell’s CEO, Michael Summersgill, wrote to Chancellor Rachel Reeves urging a firm commitment not to alter pension tax relief or tax-free cash entitlements.
Rumours have circulated that Reeves is floating reducing the 25 per cent tax-free withdrawal amount attached to pension pots.
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More pensioners are finding themselves paying tax
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Some 45 per cent of respondents admitted to being unsure about their stance on the implementation of a “pensions tax lock”.
The research revealed that a third of Britons say rumours of pensions tax changes have negatively impacted their confidence in saving for retirement.
This uncertainty has led to widespread reports of savers making decisions about their pensions ahead of the October Budget.
Tom Selby, director of public policy at AJ Bell, commented on the destabilising effect of these rumours.
He noted that the new Labour Government now has an opportunity to address weeks of negative headlines.
Selby suggested that committing to a “pensions tax lock” could demonstrate support for hard-working savers.
The retirement expert emphasised that savers are “crying out for pensions certainty” to plan confidently for the long term.
“The usual rumours and speculation about possible changes to pensions tax rules has ratcheted up ahead of Rachel Reeves inaugural Budget, driven by warnings of a £40billion fiscal black hole and the financial strait jacket the government has imposed on itself regarding National Insurance, income tax and VAT,” Selby said.
Rachel Reeves will deliver the Budget on October 30 PAOn the impact on savers, he added.”This has clearly been destabilising for people, with widespread reports of savers taking decisions over their pensions ahead of October 30, in part due to fear of the impact of possible changes rather than their long-term financial goals.”
Selby also emphasised the need for clarity, particularly among those nearing retirement.
He said: “Over half of those approaching retirement support a pensions tax lock, which illustrates the need for clarity among those most likely to be affected by any changes to pensions taxation, in particular tax-free cash entitlements.”
Responding to the suspected pension raid, a UK Government spokesperson said: “We do not comment on speculation around tax changes outside of fiscal events.”
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