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Savers are rushing to withdraw money from their pension pots in anticipation of a potential tax raid by Rachel Reeves. The Labour Party Chancellor Ms Reeves could cut the amount of money savers can take from their pensions as a tax-free lump sum. Retirees are "panicking", the Telegraph reports, because they are currently entitled to take 25 per cent of their pension pot tax-free once they reach the age of 55, up to a maximum of £268,275. Faye Church, a wealth manager at Rathbones, said “heightened anxiety among clients” had led to a recent surge in “the volume and complexity of queries”. Jason Holland, from Evelyn Partners, said that the possibility of a tax raid on pensions is “one of the main topics that is coming up in discussion”. READ MORE New rules for petrol and diesel drivers from 2030 could be scrapped Steve Webb, the former pensions minister, has also spoken out. “Given that pensions are a long-term business, we ought to have long-term stability and policy,” the former Liberal Democrats Pensions Minister said. “It’s certainly shifted the dial in terms of what the Government is capable of doing,” he said. Jon Greer, head of retirement policy at Quilter, said: “The uncertainty in the run-in to the past few Budgets is a cause of real anxiety for people, and the Government’s rigid commitment to its manifesto promise not to raise taxes on working people is only making things worse. “By ruling out changes to income tax, National Insurance, and VAT, attention inevitably shifts to other areas where revenue might be raised – with pensions often placed in the firing line.” Mr Greer said: “This vacuum of clarity allows rumours to swirl unchecked, and when it comes to pensions, that’s dangerous. Decisions like taking your tax-free lump sum are irreversible.” Steven Camero, from life insurer Aegon, said: “Making decisions based on speculation can be dangerous. It’s usually a bad idea to take money out of your pension before you need it, because you immediately lose the tax-favoured status of your pension.”
