Beware of the unintended consequences of attacks on lump sum payments, says city boss MARK FITZPATRICK

I don’t envy the Minister of Finance. Rachel Reeves must do her utmost to present a budget on October 30 that supports the agenda of the new government.

The budget situation is precarious, expectations around investment in parts of the public sector are high and taxes account for almost 75 Pension raid: speculation is mounting that Chancellor Rachel Reeves will reduce the tax-free lump sum that savers can withdraw. their pension pots with government income are excluded from changes.

The government has sought to reassure by saying that changes to income tax, national insurance and VAT are off the table, while still making it clear to the country that difficult decisions will be made, that the budget is likely to be ‘painful’ and that the The impact will fall disproportionately on those with the ‘broadest shoulders’.

Speculation is therefore rife about the remaining likely revenue-raising levers. This creates uncertainty and leads to changes in consumer behavior, some of which may not be in their long-term interests.

At St James’s Place we have seen customers trying to navigate the uncertainty, with some considering taking tax-free withdrawals from their pensions more quickly as Budget Day approaches.

However, we know that the risk of our clients taking action is likely lower than for others in the industry because they have advisors who can help them avoid potentially harmful decisions.

But once money is withdrawn tax-free, the potential retirement benefits are often lost forever.

I know financial advisors across the country will be ready to help you understand and manage any changes announced at the end of the month.

I would urge each of you to take the advice available and ensure that any changes to your personal finances are met with a proportionate and sensible response rather than a knee-jerk reaction.

Against the backdrop of shrinking UK stock markets and an outflow of money from UK-focused equity funds, and with the government’s aim to increase investment in UK assets and growth, we must avoid anything that reduces investment further.

This government knows better than anyone that a growing economy is the only way to generate the level of tax revenue needed to invest in the public sector.

It is for this reason that I would encourage the Chancellor and the teams at HMT (the Treasury) and HMRC (Revenue & Customs) to navigate the path to October 30 with care.

Given the challenging budget situation, I think all of us who are privileged enough to be better off can expect to contribute more if our government asks us to.

But the Chancellor will also know that tax increases should not lead to harmful unintended consequences, such as discouraging those of you who are saving for your retirement and investing in your long-term financial future.

Mark FitzPatrick is CEO of asset management company St James’s Place