Pension contributors may face expensive blunders unless Rachel Reeves clarifies she won't reduce lump sum payouts
In the upcoming autumn Budget, there are rumours that pensions could be affected by tax hikes. Experts warn that the Chancellor could slap a cap on the amount that can be withdrawn tax-free from private pensions, with a more likely figure for the cap being £100,000, according to pension specialists.
This potential change has raised concerns among retirees who use their tax-free savings to pay off a mortgage or debts. Experts warn that such a cap could topple retirement dreams.
The Labour Government, under Rachel Reeves, is facing a £50billion deficit in the public finances and is planning tax hikes to address this deficit in the autumn Budget. Mel Stride, the Shadow Chancellor, criticizes Rachel Reeves for pushing back the Budget until the end of November, stating it will cause more damaging speculation and tax rises due to Labour's economic mismanagement.
In an effort to provide stability on pension taxation, Stockbroker AJ Bell is pushing for a 'pensions tax lock' to ensure that pension taxation remains unchanged for at least this parliament. Rachel Vahey, head of public policy at AJ Bell, suggests ruling out changes to tax relief or tax-free cash to stop speculation and provide stability for retirement planning.
Steve Webb, former pensions minister, suggests a commitment from the Government not to change pension tax relief or the tax-free lump sum for the entire parliament. Meanwhile, Jon Greer, of wealth manager Quilter, warns that uncertainty about pensions is causing anxiety and leading to hasty decisions.
If you have questions about pensions, Thisismoney offers an email service ([email protected]) to help you navigate these changes. AJ Bell, Hargreaves Lansdown, Interactive Investor, InvestEngine, and Prosper are providers of Self-Invested Personal Pensions (SIPPs) that you may consider.
It is important to stay informed about potential changes to pension taxation and to make informed decisions about your retirement planning. The Treasury spokesman declined to comment on speculation around future changes to tax policy. Under Labour, nothing is safe, including pensions, jobs, pay packets, and homes, according to Mel Stride.
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