AJ Bell, one of the UK’s leading investment platforms, is calling on the Chancellor to commit to a ‘Pensions Tax Lock’ at the forthcoming Budget, offering savers a guarantee of stability on pension taxation for at least this parliament.
In a letter to the Chancellor the business has urged the new government to use its inaugural Budget to make a public pledge to uphold the key features of the pension tax system, sending a clear signal it is committed to pension tax stability over the long-term.
Doing so will ensure workers can invest for retirement with confidence in the pension tax system, providing certainty to those planning for the future.
Speculation regarding the future treatment of Pension Commencement Lump Sums (tax free cash) and the tax treatment of pension contributions risks undermining consumer confidence in the UK’s most important long-term savings product. Addressing this uncertainty should be a key priority for the Chancellor.
As one of the UK’s leading pension providers, AJ Bell is urging industry peers and policymakers to support the case for a Pensions Tax Lock, guaranteeing certainty for pension savers across the UK.
AJ Bell CEO, Michael Summersgill, says: “The Chancellor should resist a short-sighted tax grab from the nation’s long-term savings system. Instead, a public commitment to a Pensions Tax Lock, promising not to tinker with the fundamentals of the pension tax system in this parliament, would deliver confidence for savers and signal that this government is serious about supporting long-term prosperity.
“Workers who set money aside decades before retirement, taking responsibility for providing for themselves once they stop working, should not be subject to endless speculation about how their own money may or may not be taxed.
“Individuals are expected to spend their entire working life building a retirement pot based on a pension tax pact with the government. A commitment is made in good faith that they will be rewarded for making sacrifices today to provide for themselves tomorrow.
“Yet in recent months speculation around the future tax treatment of pension contributions, as well as entitlement to 25% tax free withdrawals from a pension in retirement, has been allowed to fester. This risks undermining confidence in the UK’s most critical long-term savings vehicle, upon which the retirement security of millions of working households in the country depends.
“A public commitment to a Pensions Tax Lock would ensure savers can plan ahead with confidence under this government and lay down the gauntlet to any successor tempted to raid the nation’s savings.”
