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\t\tRachel Reeves has been warned to take \u201ccare\u201d with a possible pension tax raid. \t<\/p>\n\t\t\tMonday 21 July 2025 10:29 am\n\t\t\t<\/p>\n
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\t\tRachel Reeves has been warned to take \u201ccare\u201d with a possible pension tax raid. \t<\/p>\n
City platform Hargreaves Lansdown has warned Rachel Reeves that \u201ctinkering\u201d with the pension tax relief could cost the UK in the long run and undermine the government\u2019s fresh attempts to get workers to save more into retirement.\u00a0<\/p>\n
The return of the Pensions Commission, which will report its findings on the adequacy of retirement savings in 2027, will likely see several policies recommended to the government to boost workers\u2019 savings as they approach retirement.\u00a0<\/p>\n
But Hargreaves Lansdown<\/a> has warned that expected tax rises in this year\u2019s Autumn Budget could thwart plans to boost pension contributions if the lump sum threshold <\/a>is reduced or rates are changed.\u00a0<\/p>\n Its head of retirement Helen Morrissey said the commission will have a \u201ctricky\u201d job in trying to get people to boost pension contributions but warned that hiking taxes could dissuade people from putting enough cash in pension pots.\u00a0<\/p>\n \u201cAs we run into the Budget any discussion around reform of pension tax relief needs to be treated with care,\u201d Morrissey said.\u00a0<\/p>\n \u201cTinkering with these incentives could lead to people putting less away for their future which could cost the state more in the long run.\u00a0<\/p>\n \u201cStability in pensions tax is essential if people are going to be confident that the money they put away today will be there for them decades into the future.\u201d<\/p>\n The Fabian Society, a left-wing think tank, said last year the government should create a flat rate of tax relief for individual and employer pension contributions for all tax bands or reduce the tax-free lump sum, which can currently be in excess of \u00a3250,000.\u00a0<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tWhat changes to the pension salary sacrifice scheme could mean for you?<\/a><\/p>\n Labour ministers ruled out scrapping the higher 40 per cent rate tax relief on pension contributions before the last Budget but it has so far refused to comment <\/a>on suggestions pensions could be targeted.\u00a0<\/p>\n Pensions commission introduced to help boost savings<\/p>\n The Department for Work and Pensions (DWP)<\/a> said some 45 per cent of workers were not putting any cash into their pensions, with an estimated 15m people not saving enough for retirement.\u00a0<\/p>\n