St James’s Place’s (SJP) group advice director has called on the UK government to end Budget speculation and avoid making changes to pension rules at the upcoming Autumn Budget, or risk undermining its goal to boost long-term investing and confidence.
The Budget has been preceded by months of rife speculation about what levers chancellor Rachel Reeves (pictured) may pull to fill in a multi-billion pound “black hole” in the public finances, with the cash ISA, salary sacrifice and income tax bands reported to be on the cards.
There was also speculation over pension tax-free lump sums and pension tax relief, but the government has indicated it doesn’t intend to make changes to these areas.
However, it did not end speculation for weeks, and advisers reported seeing clients asking to take their tax-free cash out – a pattern seen before the last Autumn Budget in response to speculation, which led to thousands of people taking their tax-free cash out and then attempting to return it.
It also comes after the government upended financial planning in the UK by bringing pensions into the inheritance tax (IHT) net from 2027 in its last Autumn Budget.
Alexandra Loydon, group advice director at SJP, said: “Constant changes to pension rules undermine the very goal the Government and regulators are pushing for – boosting long-term investing and closing the UK’s investment gap.
“You can’t build confidence in a system that keeps shifting under people’s feet. Salary sacrifice is one of the few ways that helps people save more for retirement and restricting it risks discouraging contributions at precisely the wrong time.
“We’ve also seen how speculation around tax-free cash can push people into withdrawing money unnecessarily, often against their long-term interests. Rumours and uncertainty can be just as damaging as actual policy changes because they drive poor decisions and weaken confidence in saving for retirement.”
