There have been claims for months that pensions will in the Chancellor's sights at the Budget
saving to be answered by our expert, Tom Selby, director of public policy at investment platform AJ Bell. There is nothing he doesn’t know about pensions. If you have a question for him, email us at
This idea always felt like a non-starter, primarily because implementing such a reform would effectively result in millions of “working people” – exactly whom the Chancellor and Prime Minister have said they will protect – being hit with tax rises. Having just settled pay disputes with NHS workers, it is hard to imagine the new Government will be spoiling for another fight over public-sector pensions.
Given that one of the key promises made by the new Government was to deliver economic stability to Brits, AJ Bell has been urging the Chancellor to pledge not to make major changes to either pension tax relief or tax-free cash for an extended period of time. This “pensions tax lock” would send a clear signal to savers that the goalposts won’t be moved and should give people more confidence to take decisions based on their long-term interests.
There will, for example, be people who chose to transfer defined benefit pensions into a defined contribution scheme in part because they wanted to prioritise passing money on tax efficiently to loved ones. If all of a sudden that money became subject to a new pensions death tax, those people would, understandably, feel like the rug has been pulled from under them.
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