Ms Reeves rules out the lump sum cut, according to personal finance experts.
Ms Reeves rules out the lump sum cut, according to personal finance experts.
Rachel Reeves could make a lump sum pension change – with UK households warned. Pension savers are at risk of costly mistakes unless Labour Party Chancellor Ms Reeves rules out the lump sum cut, according to personal finance experts.
They warn the Chancellor’s refusal to rule it out is causing anxiety and uncertainty, leaving savers to make ‘hasty decisions’ they could come to regret.
Jon Greer, of wealth manager Quilter, said: “When it comes to pensions, that’s dangerous. Decisions like taking a tax-free lump sum are often irreversible.”
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Former pensions minister Steve Webb, now a partner at consultancy LCP, and a former Liberal Democrats and Conservative Party coalition government cabinet member, said: “If the Government has no plans to change pension tax relief or the tax-free lump sum then it would be helpful if they made a commitment not to do so for the whole of the parliament.
“That way people could plan for their futures with a degree of certainty, rather than [this] constant uncertainty.”
Rachel Vahey, head of public policy at the firm, said: “We need to put a stop to this speculation by ruling out changes to tax relief or tax-free cash, at least for this parliament.
‘” pensions tax lock would give the stability people desperately need to plan for retirement with confidence.”
She said cutting the tax-free lump sum “would cause an outcry, especially amongst public sector workers”, adding: “The last thing this Government needs is yet another U-turn.”
As it stands, people with a private pension can access their money at 55 – rising to 57 from April 2028 – and can withdraw 25 per cent tax free, up to a maximum of £268,275.
But the Chancellor could cap the amount that can be withdrawn tax free, it is feared. Labour Party pensions minister Torsten Bell previously called for a £40,000 cap while he was head of think-tank the Resolution Foundation.
Shadow Chancellor Mel Stride said: “It’s clear tax rises are on their way thanks to Labour’s economic mismanagement. Under Labour, nothing is safe – not your pension, your job, your pay packet, your home.”