Savers warned: chancellor is looking at a new pension raid

A former pensions secretary has warned that the pension pots of millions of savers are vulnerable to a new tax attack from Rachel Reeves.

In her first budget last Wednesday, the Chancellor refrained from a number of harmful measures, such as reducing the lump-sum benefit or reducing the tax credit. But for the first time, pensions were included in inheritance tax.

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 will likely return for more in future budgets.

“I can’t imagine that the Chancellor won’t meddle in pensions again in this parliament,” Baroness Altmann – Pensions Minister in David Cameron’s government – ​​told the Mail.

“The temptation to damage the pension funds of those who have put money aside is too great to rely on such hope.

“There will certainly be rumors at some point that more significant changes will take place. Of course I hope not, but realistically I think this is unlikely.

‘The good incentives and behavioral impulses that pension freedoms bring are now being nullified.’

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

In a sharp rebuke, the Institute for Fiscal Studies (IFS) said she was allowing speculation to run rampant as she finalized her tax and spending plans.

Rumors that she planned to cut the amount savers can withdraw tax-free proved damaging – with many rushing to withdraw cash.

It turned out that Reeves did not reduce the tax-free lump sum. Pension experts believe that many savers who have withdrawn money from their pension early will have caused irreversible damage to their pension.

IFS director Paul Johnson said: “Ms Reeves may want to reflect on the damage done by allowing various rumors to circulate for so long. If there had never been any intention to change the income tax treatment of pensions, she should have said so.’