Hands off our pensions, ex-ministers tell Reeves amid fears savers will rush to withdraw cash to avoid being hit

By HUGO DUNCAN

Updated: 22:00 BST, 16 June 2025

Rachel Reeves is under mounting pressure to rule out a punishing tax raid on pensions to help fund her lavish spending spree as the economy tanks.

Fears are growing that the Chancellor will target the retirement pots of millions of workers in the autumn as weak growth blows a black hole in her plans.

Two former pensions ministers – Sir Steve Webb and Baroness Altmann – have joined the chorus of experts urging her to rule out such a raid.

But the Treasury has refused to do so – fuelling speculation that pensions are in her sights.

Months of rumours could prove highly damaging if – as was the case before the last Budget – it leads to a rush of savers withdrawing cash from their pension pots early to avoid being hit.

Spending spree: Fears are growing that Chancellor Rachel Reeves will target the retirement pots of millions of workers in the autumn as weak growth blows a black hole in her plans

Savings and investment company AJ Bell last week called on the Chancellor to introduce a ‘pensions tax lock’ that ruled out any changes for the remainder of this Parliament. This, it said, would ‘offer investors the confidence to plan for the long term’.

Webb, now a partner at pension consultants LCP, echoed those comments.

‘Once again we have the return of uncertainty about the pensions tax regime,’ he told the Mail. ‘This annual spectacle is deeply unsettling for what is supposed to be a long-term business.

‘It would be hugely valuable for the Chancellor to set out her position on pension tax breaks and then leave things unchanged for the rest of this Parliament so that people know where they stand and can plan accordingly.’

Altmann agreed, warning speculation about tax changes is ‘undermining people’s ability to plan ahead and damaging confidence in pensions’.

A raid on pension pots could see Reeves cut the maximum amount savers can withdraw tax free from the current limit of £268,275.

Such a move was speculated before the Budget last October – leading to some savers withdrawing their money early despite warnings it could leave them worse off in retirement.

Other options include taxing pension contributions, cutting the annual allowance or reinstating a lifetime allowance.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: ‘It’s important to learn the lessons from the speculation ahead of last year’s Budget. We can’t have a repeat of this for a second year.’

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Hands off our pensions, ex-ministers tell Reeves amid fears savers will rush to withdraw cash to avoid being hit

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