A minister has risked fuelling a pension pot panic by refusing to rule out a raid at the Budget.
Experts have been warning of signs that people are acting to pull money out of retirement funds amid speculation about Rachel Reeves‘ plans.
The Chancellor is scrambling to find ways of balancing the government’s books with fears the gap could be as big as £50billion.
Before the fiscal package last year there were rumours that the amount people can draw out of pots tax-free would be cut. The limit is currently 25 per cent of the value, to a ceiling of £268,275.
In the event Ms Reeves did not go ahead with a cut, but there was criticism that the uncertainty meant many Brits acted pre-emptively and damaged their own financial interests.
Experts have warned that another rush is developing among people who have made plans based on getting a tax-free lump sum. That could include clearing outstanding mortgages, gifting to children, or bolstering incomes with savings.
Asked at a conference this week whether there could be a pensions raid announced on November 26, Treasury minister Torsten Bell said: ‘I am not going to start commenting on Budgets.’
Asked at the SMF’s Pensions Conference this week whether there could be a pensions raid announced on November 26, Treasury minister Torsten Bell said: ‘I am not going to start commenting on Budgets.’
Ministers often insist they will not be drawn on the contents of future fiscal packages, arguing they are market sensitive.
Mr Bell told the Social Market Foundation event: ‘Judge the Government on what it has done – look back to the Budget last autumn, that is where you can start to see what the Government has done, which is to make some difficult choices, but make some fair choices, whether it was on inheritance tax or capital gains tax or on non-doms or on private jets or on private schools.
‘Why are we doing those things? Because we have got to end the doom loop.’
Craig Rickman, of Interactive Investor, told the Telegraph: ‘It’s clear that more people are drawing larger amounts of their pension tax-free cash, presumably in fear that the Government will scrap or reduce the maximum amount currently available.’
Ian Futcher, of financial advisers Quilter, said: ‘A lot of people reacted pre-emptively before the last Budget and then had regret. There were a lot of people who took it out, not realising you couldn’t put it back in again.’
Chancellor Rachel Reeves is scrambling to find ways of balancing the books with fears the gap could be as big as £50billion
