Rachel Reeves is under growing pressure to rule out a pensions tax raid ahead of the Budget.
Speculation is mounting that the Chancellor may reduce the maximum amount that savers can withdraw tax-free from their retirement funds – prompting some to pull cash out now.
There are also fears she could cut tax relief on pension contributions in a desperate attempt to plug a hole in her Budget plans.
An online parliamentary petition launched this week calling on the government to rule out both options had been backed by close to 10,000 signatures.
Should it reach 10,000, the government would be obliged to respond. And if it hits 100,000, the petition will be considered for a debate in Parliament.
Rachel Reeves has been urged to rule out a tax raid on pensions
Tom Selby, director of public policy at AJ Bell, which launched the petition, said: ‘Pension savers across the UK have sent a clear message to the Chancellor: we need a firm commitment to a Pension Tax Lock to allow people to plan ahead with certainty.
‘Now government need to step up and deliver their end of the bargain with a public pledge not to tinker with the cornerstone of long-term retirement planning.
‘This government insists it is on the side of those who work hard. Now is the time to show it really means that. Anyone sacrificing take home pay today to save for the future deserves a concrete promise from the government that they will have the right to access their pension on the same terms as the generation that came before them.’
Currently, savers are allowed to withdraw 25pc of their pension tax free, up to a maximum level of £268,275, from the age of 55.
Some think that will be a tempting target for a raid by the Chancellor as she bids to fill in a financial black hole estimated at £30bn in next month’s Budget.
But opponents of such a move argue that it would be unfair to savers who have carefully planned their financial futures.
>Â Sign the petition to rule out a tax raid on pension lump sums here
Fear of such a tax raid ahead of last year’s Budget prompted an avalanche of withdrawals back then even though the tax changes did not materialise.
Many later rued the decision.
It is also feared the Chancellor could reduce tax relief on the pension contributions of higher rate taxpayers in a bid to raise cash.
Pension contributions are exempt from income tax, as are investment returns within a pension fund. Instead, tax is deferred to when the money is taken out in retirement.
The petition calls on Reeves to rule out such a move, arguing: ‘We believe this would help ensure retirement savings are protected and people can save with confidence.’
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Reeves urged to rule out pension tax raid as thousands sign petition