Rachel Reeves is facing a growing backlash after refusing to rule out a tax raid on pensions.
The bosses of Legal & General, St James’s Place, and AJ Bell sounded the alarm over the Chancellor’s plans amid fears she will target retirement pots in the Budget on November 26.
The warnings came as the Government refused to rule out changes to the tax-free lump sum and reliefs on pension contributions in response to a petition. Shadow Chancellor Mel Stride said: ‘Damaging speculation about pension tax changes is causing concern for savers.
‘People cannot plan for their retirement when Labour’s economic mismanagement is fuelling so much uncertainty.’
Reeves is scrabbling to raise as much as £30billion of extra taxes – with pensions, savings and family homes in the firing line.
Antonio Simoes, the boss of L&G, Britain’s biggest savings firm with more than £1trillion on its books, said any tax changes that deterred people from putting aside money for retirement would be ‘really concerning for the country’.
Big spender: Chancellor Rachel Reeves is scrabbling to raise as much as £30bn of extra taxes to make her Budget numbers add up – with pensions, savings and homes in the firing line
St. James’s Place boss Mark FitzPatrick warned of ‘heightened speculation’ around the Budget and ‘a more uncertain picture for UK consumers’.
A survey from Nucleus, a service provider for financial advisers, found three in five savers were worried Reeves would cut the tax-free lump sum.
Those aged 55 and above can take up to 25 per cent of the value of their pension tax-free, up to a maximum of £268,275. But it is feared this could be reduced to £100,000 or even £40,000.
Nucleus technical services director Andrew Tully said: ‘Last year’s speculation of potential changes to tax-free rules saw many investors take lump sums, with some trying to reverse those actions when no such rule change materialised.
‘There’s a real sense of deja vu.’
The Government, responding to a 10,000-signature petition calling for changes to lump sums or tax reliefs to be ruled out, said: ‘The Government does not comment on proposed tax changes or tax-related speculation ahead of Budgets.’
Mike Summersgill, boss of AJ Bell, which launched the petition, said: ‘Speculation over pension taxation ahead of the Budget, which has developed in the absence of a clear and lasting Government commitment to pension tax stability, creates damaging uncertainty.’
Tom Selby, director of public policy at AJ Bell, said: ‘Changing the rules of the game before people retire would be a betrayal of those still working hard to build up their pension.’
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