Savers warned: Chancellor eyeing new pension raid

A former pensions minister has warned that the retirement pots of millions of savers are vulnerable to another tax raid from Rachel Reeves.

The Chancellor decided against a number of damaging measures in her first Budget last Wednesday – such as slashing the lump sum allowance or cutting tax relief. But it did include pensions in inheritance tax for the first time.

Industry experts are now calling for a so-called Pensions Tax Lock to rule out further changes and provide savers with certainty ahead of retirement.

But Ros Altmann warned that Reeves is likely to come back for more in future Budgets.

‘I cannot imagine the Chancellor not interfering with pensions again in this Parliament,’ Baroness Altmann – who was a pensions minister in David Cameron’s government – told the Mail.

‘The temptation to damage the pension funds of those who have money set aside is too great to rely on any such hopes.

‘There will certainly be rumours aplenty of significant further changes at some stage. Of course, I hope not, but realistically feel this is unlikely.

‘The good incentives and behavioural nudges put in by the pension freedoms are now being killed off.’

The comments come after Reeves was accused of failing to stop savers from making damaging decisions about their retirement before the Budget.

In a stinging rebuke, the Institute for Fiscal Studies (IFS) said she allowed speculation to swirl as she finalised her tax and spending plans.

Rumours that she was planning to cut the amount savers can withdraw tax free proved damaging – with many rushing to take out cash.

As it turned out, Reeves did not reduce the tax-free lump sum. Pensions experts believe many savers who withdrew cash from their pensions early will have done irreversible damage to their retirements.

IFS director Paul Johnson said: ‘Ms Reeves may want to reflect on the damage done by having allowed various rumours to circulate for so long. If there was never any intention to change the income tax treatment of pensions then she should have said so.’

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