Rachel Reeves has been urged to come clean over any planned changes to how pension savings are taxed after more than 10,000 signed an parliamentary petition.
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 raise cash to plug a hole in her Budget plans.
Former pensions minister Ros Altmann urged caution.
‘Damaging policy changes could also undermine the whole concept of pension saving and destroy confidence for the future, leaving millions poorer in later life,’ she said.
An online parliamentary petition launched last week calling on the Government to rule out both options has now crossed the 10,000 signatures required to force the government to respond.
If it hits 100,000, the petition will be considered for a debate in Parliament.
Fears are mounting Rachel Reeves is plotting a Budget tax raid on pensions
Tom Selby, director of public policy at broker 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 the Government needs to step up and deliver its 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.’
Savers are permitted 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.
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 Reeves 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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