Steve Webb, a former pensions minister and current partner at LCP, told FT Adviser that the pensions sector would greatly benefit if the chancellor pledged to maintain pension tax relief for the remainder of this Parliament.
“We’ve already seen how speculation ahead of the October 2024 Budget prompted some savers to cash in their pensions prematurely. This kind of uncertainty should be avoided before every Budget,” he said.
“If the chancellor has reviewed pension tax relief and decided against using it as a source of additional revenue, it would be a significant step forward to publicly confirm this decision. Doing so would enable individuals to plan for their retirement with greater confidence.”
Prior to the Budget, there had been widespread speculation that Rachel Reeves might cut the tax-free portion of pension savings from the current 25% or lower the maximum allowable amount, presently capped at £268,275.
This uncertainty caused some individuals to panic and access their tax-free cash before any official decisions were announced.
In response, some have attempted to reverse their actions by utilizing the ‘cooling-off’ period.
