Savers warned: Chancellor considering new pensions raid

A former pensions minister has warned that the retirement funds of millions of savers are vulnerable to another tax raid by Rachel Reeves.

Last Wednesday, the Chancellor opposed a series of damaging measures in her first budget, such as cutting the lump-sum allowance or cutting tax relief. But it did include pensions in the inheritance tax for the first time.

Industry experts are now calling for a so-called pension tax freeze to rule out further changes and give savers security before retirement.

But Ros Altmann warned that Reeves is likely to come back for more in future budgets.

“I can’t imagine the Chancellor not interfering with pensions again in this Parliament,” Baroness Altmann, who was pensions minister in David Cameron’s government, told the Mail.

‘The temptation to damage the pension funds of those who have money set aside is too great to rely on such hopes.

‘There will surely be many rumors about significant changes at some point. Of course, I hope not, but realistically I feel this is unlikely.

“The good incentives and behavioral stimuli that pension freedoms provide are now disappearing.”

The comments come after Reeves was accused of failing to stop savers from making damaging decisions about their retirement ahead of the Budget.

In a sharp rebuke, the Institute for Fiscal Studies (IFS) said it allowed speculation to swirl as it finalized its tax and spending plans.

Rumors that it planned to reduce the amount savers can withdraw tax-free proved damaging, with many rushing to withdraw cash.

As it turned out, Reeves did not reduce the tax-free lump sum. Pension experts believe that many savers who withdrew money from their pensions early will have caused irreversible damage to their retirements.

IFS director Paul Johnson said: “Ms Reeves may want to reflect on the damage caused by allowing various rumors to circulate for so long.” If there was never any intention to change the income tax treatment of pensions, then you should have said so.’