Advertisement
The boss of Britain’s largest pensions firm has urged Rachel Reeves to dispel speculation that she will stage a Budget raid on retirement funds. Phoenix chief executive Andy Briggs said savers needed reassurance that the Chancellor would not ‘chop and change’ pensions rules.
‘Therefore, we should be looking to stop it being an area of speculation of regular changes all the time,’ Briggs told the Mail. ‘You need people to feel confident that if they save their hard-earned money, they’re going to be rewarded for doing so.’
The comments came as Reeves was warned that a pensions tax raid risked creating an ‘Omnishambles’ – the term used to describe Tory chancellor George Osborne ’s notorious 2012 Budget. Reeves faces growing calls to rule out changes to Britons’ pensions in her desperate hunt for cash to make her Budget numbers add up.
Michael Summersgill, boss of broker AJ Bell, and former Institute for Fiscal Studies director Paul Johnson last week called on the Chancellor to provide more certainty about retirement savings rules. Pension savers are able to withdraw up to 25 per cent of their nest eggs tax-free from the age of 55, up to a maximum of £268,275. Reducing that threshold was seen as a tempting target for Reeves as she looked to shore up the public finances in last year’s Budget.
That speculation prompted a surge in those pulling money out of retirement funds to pre-empt any rule change. Those fears proved unfounded, but with the next Budget on November 26, fears are again growing that the Chancellor may look to this area as she aims to repair a financial black hole estimated at £50billion.
Briggs said savers have been left worse off by pulling money out prematurely last year and that it should not be allowed to happen again. He added: ‘We need to avoid a huge amount of speculation that leads customers to making what turn out to be sub-optimal decisions.’ The Chancellor has so far refused to rule out a pension tax raid in the Budget, though a Whitehall source last week said it was an area that was not being looked at.
Asked if she should rule it out, Briggs said: ‘Pensions are a very long-term business and if you leave consumers with a sense that it can chop and change on a regular basis, then you will undermine consumer confidence – people will save a lot less and have a poorer retirement.’ Meanwhile, a report from consultants LCP pointed to the danger of slashing pensions tax relief for higher earners.
Former pensions minister Steve Webb, a partner at LCP and co-author of the report, said: ‘Reforms might raise far less than expected, break manifesto promises to workers or put additional burdens on employers. ‘The political backlash against such reforms could easily echo previous “Omnishambles” budgets where a U-turn was made within a matter of weeks.’
#Hands #pensions #industry #chief #tells #Reeves
