Hands off our pensions! Reeves said this in panic about a budget tax raid on pension pots

Rachel Reeves has been urged to rule out another tax attack on pensions for the rest of this Parliament to avoid a repeat of the panic over her first budget.

In a strong intervention on behalf of those saving for their retirement, ex-pensions ministers lined up with industry leaders to seek reassurance from the Chancellor.

They told the Mail that certainty was needed – after rumors of tax changes in Labour’s first budget sparked a 14-year rush to take money out of pensions.

Former Pensions Secretary Steve Webb said “constant speculation” about changes to pension taxes was “very damaging”.

And in the Mail, Michael Summersgill, CEO of AJ Bell, called on Reeves to commit to a ‘Pensions Tax Lock’ that promises ‘not to tamper with the foundations of the pension tax system in this House’.

Ahead of the Budget in October, speculation mounted that Reeves was planning a tax attack on pension pots as she struggled to add up her figures.

Options included reducing tax relief on pension contributions from higher earners and reducing the amount savers can withdraw tax-free at the age of 55 from £268,275 to £100,000.

The threat to the tax-free lump sum proved particularly damaging as savers rushed to withdraw money from their pension pots, despite warnings that this would leave them worse off in retirement.

Reeves ultimately decided against such a move, instead introducing a new inheritance tax by including pension pots in inheritance tax for the first time.

She is now under pressure to rule out further changes, giving savers the certainty they need to plan their retirement.

Ros Altmann, another former pensions minister, said: “The chancellor needs to think carefully about the damage done to ensure she does nothing more.”

Webb, now a partner at pension advisers LCP, called on Reeves to “confirm that the pension tax relief system will be left alone for the next five years”.

He added: “This would create a welcome period of stability. The continued speculation about changes to pension tax relief is very damaging and has even led some people to make poor financial decisions in the run-up to the October Budget, out of fear of what could change.”

Richard Wilson, head of Interactive Investor, said: ‘Constant speculation about tax cuts for pensions is hampering people’s ability to plan and save, and can lead to panicky decision-making.

“A firm commitment that tax cuts must be protected would provide welcome stability, while we should do everything we can to encourage more people to save and invest for their future.”

Mark FitzPatrick, head of St James’s Place, said: ‘The inclusion of pensions in inheritance tax will have come as a shock to many.

‘We must avoid further changes to pension tax and exemption or risk damaging the reputation of Britain’s best-known and stable long-term investment vehicle.’