The chancellor\u2019s decision to levy inheritance tax on pensions is the latest policy change to throw retirement plans up in the air.<\/p>\n
And for Sharan Sammi, 44, it is one too many. The business owner has now abandoned her pension due to fears over any more future changes and is instead using an Isa to save for retirement.<\/p>\n
Sammi, who lives in the West Midlands, has always been a saver. As a student, she stashed away her earnings as a part-time bank cashier and was able to buy her first rental property aged 24.<\/p>\n
But she is worried that her pension savings could be vulnerable to changes in the budget on November 26, as politicians look for ways to plug the rumoured \u00a330 billion black hole. She prefers to have her money invested in a way that will allow her to react quickly to any rule changes. <\/p>\n
She said: \u201cHaving an Isa is super-important to me. It\u2019s more manageable because you\u2019ve got more control, you\u2019ve got more say. <\/p>\n
\u201cAt the end of the day, you could then turn round and say, well, actually, I\u2019m going take all my money out of the Isa. Whereas with the pension pot, you can\u2019t control any of those rules. It\u2019s like having the rug taken out from under your feet.\u201d<\/p>\n
Sammi has been married for 13 years and has two children. She uses up her full \u00a320,000 Isa allowance every year and has a six-figure investment portfolio. She also owns several rental properties and plans to use her Isa and rental income to give her a comfortable retirement. She puts away the maximum \u00a39,000 each year into her children\u2019s Junior Isas.<\/p>\n
\u2022 The pension deal that pays you to retire early<\/a><\/p>\n Sammi has a modest pension she built up during her 20 years working in the banking sector. During her time as an employee, she always paid into her workplace pension because her employer agreed to match her contributions. However, she has long since stopped contributing and now says her pension is worth less than her Isa portfolio.<\/p>\n Sammi worries that potential changes to the tax-free lump sum could affect both her and her mother, who is still waiting to take her tax-free cash. She says watering down this valuable benefit could prove as unpopular as the closure of final salary pension schemes, adding: \u201cIt\u2019s going to be a big blow from everything that we knew historically over the last 20 years.\u201d<\/p>\n \u2022 Put a stop to damaging pension tax rumours, Rachel Reeves told<\/a><\/p>\n The planned introduction of inheritance tax on pensions is also discouraging her from making further pension contributions. \u201cIt is another blow, because you\u2019re taking everything away, all the benefits, all the plus points,\u201d she said.<\/p>\n Helen Morrissey from the investment firm Hargreaves Lansdown said the idea that tax-free cash could be reduced or tax relief tinkered with can make people hesitant to lock money away long-term. <\/p>\n But she sounded a note of caution. \u201cIt\u2019s really important not to base your long-term planning on rumours. For instance, deciding to take your tax-free cash<\/a> now, without a plan for what you are going to do with it, risks you exposing it to taxes such as dividend tax or capital gains that it otherwise wouldn\u2019t have been.\u201d<\/p>\n