Chancellor Rachel Reeves is under pressure to avoid further tax increases on pensions after appointing Torsten Böll as the new pensions minister, who advocates for substantial reforms. Böll’s proposed changes include reducing the tax-free withdrawal limit from retirement accounts significantly. The speculation around pension taxation has sparked concern among financial experts that such changes could prompt savers to withdraw from their pension pots prematurely, jeopardizing their financial security. The Treasury has not ruled out potential tax hikes on pensions, prompting calls for a “pension tax lock” to prevent future changes that could harm savings.
- Rachel Reeves is trying to plug a hole in the national finances
- New Pensions Minister Torsten Böll has called for fundamental reforms.
Chancellor Rachel Reeves is being urged to rule out further tax increases on superannuation payments after she was appointed pensions minister who is calling for sweeping reforms.
Following Torsten Böll’s promotion, industry experts want assurances from the chancellor that pension savings will not be targeted as he tries to plug holes in the national finances.
Bell, a former president of the left-wing Resolution Foundation, has in the past advocated for “complete reform” of pension tax cuts that hurt millions of middle-class workers.
He is also calling for a significant reduction in the amount people can withdraw tax-free from their retirement accounts from £268,275 to just £40,000.
Mr Bell is a former adviser to Ed Miliband, best known for masterminding the disastrous ‘Ed Stone’ stunt in which the then Labor leader commissioned limestone slabs inscribed with his pledges.
His appointment as pensions minister comes after Mr Reeves included pensions in inheritance tax for the first time in his October budget, leading to speculation that Mr Reeves could hit pensions again in his “mini-budget” in March. I’m calling.
Worrying: Thorsten Bell’s appointment as pensions minister fuels speculation Rachel Reeves could hit pensions again in her March “mini-budget”
There are fears that talk of cuts to tax-free lump sum payments could be particularly damaging as savers rush to withdraw cash from their pension pots, as they did before the last Budget. Experts warn that this will leave many people worse off in retirement.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: ‘People rushed to access tax-free cash ahead of the recent budget and no changes were made. “We have seen the damage that speculation can do.” No one wants this situation to happen again.
“People need certainty to plan for the future without worrying that future changes will undermine their efforts.”
AJ Bell, from the Pensions and Savings Investment Platform, called on the Chancellor to agree a “pension tax lock” to take any changes “off the table for the rest of Parliament”.
Rachel Behey, head of public policy at AJ Bell, said: “The Prime Minister must nip harmful rumors and speculation in the bud.
But the Treasury refused to rule out further tax increases on pensions.
Baroness Altmann, a former pensions minister, told the Mail this week that “private and state pensions are under attack”.
DIY investment platform
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
hargreaves lansdowne
hargreaves lansdowne
Free fund trading and investment ideas
interactive investor
interactive investor
Fixed investment from £4.99 per month
saxo
saxo
Get back £200 in transaction fees
Trading 212
Trading 212
Free trading, no account fees
Affiliate links: If you take out an item from This is Money, we may earn a commission. These deals have been selected by our editorial team because we think they are worth highlighting. This does not affect our editorial independence.
Compare the investment account that’s right for you
