Pre-Budget speculation “chips away at people’s confidence in pensions” – AJ Bell

Amid rumours that Chancellor Rachel Reeves is due to scrap plans to reduce the 40% tax relief for higher earners, and Labour’s decision to drop plans to reintroduce a cap on the lifetime allowance on pension savings, experts have warned of the damage being done by ongoing Budget speculation.

Michael Summersgill, chief executive at AJ Bell, warned that speculation over pension tax incentives could be harmful.

He said: “Constant rumour and speculation about the future of retirement tax incentives…are hugely damaging.

“People are taking financial decisions in part based on pre-Budget speculation and it chips away at people’s confidence in pensions generally.”

Summersgill reiterated the importance of stability, and urged the Chancellor to use her first Budget to commit to long-term stability in the pension tax system.

“The Chancellor has an opportunity to nip this in the bud by using her inaugural Budget to publicly commit to a pact on pension taxation.

“A clear promise to deliver tax stability on pensions for at least a decade would provide much-needed certainty to savers across the country.”

Mike Ambery, retirement savings director at Phoenix Group, said: “Changes to income tax relief are a potentially significant revenue raiser but come with two major challenges.