AJ
Analysis of FCA data shows excess tax-free cash withdrawals of around £10 billion were triggered by speculation around the 2024 Budget.
The investment platform has called upon John Healey to make a long-term commitment to stability on key pension tax incentives including tax-free cash and tax relief, warning that constant speculation about potential changes undermines confidence in the pensions system and leads to people making irreversible decisions.
Furthermore, AJ Bell said it runs counter to wider government efforts to boost pensions adequacy and drive greater levels of investment, including in the UK economy.
A parliamentary petition launched by AJ Bell in 2025 calling for a government commitment not to reduce the amount people can withdraw from their pension tax-free or the amount of tax relief given on pension contributions attracted over 20,000 signatures from the public and financial advisers.
Michael Summersgill, CEO of AJ Bell, said: “Savers lit a £10 billion distress flare at the 2024 Budget, which was never extinguished. To avoid another damaging repeat, Chancellor John Healey must side with savers by committing to pension tax stability now.
“A pledge of certainty would not cost a penny in new Treasury spending and put an end to rumours that have damaged household finances and the economy.
“The Chancellor should be laser-focused on boosting growth and getting households onto a sound financial footing. Ending a phenomenon that has seen tens of billions taken out of investments and parked in cash should be right in his crosshairs.”
In addition, AJ Bell has stressed its opposition to bringing unused pension funds within the scope of inheritance tax from April next year, stressing that the rules are “unnecessarily complex” and will create confusion, cost and distress for bereaved families. Instead, it says simpler alternatives, such as a flat-rate charge on pension funds at death should be considered.
Similarly, AJ Bell said the Government should rethink changes to non-cash ISAs, arguing that they will add complexity and risk, pushing more ISA account holders into cash rather than investment.
Finally, AJ Bell has urged the Government not to use the upcoming Budget to further penalise investors.
“Capital Gains Tax and investment income allowances have already been severely reduced in recent Budgets. Further changes would weaken incentives to save and invest and should not be pursued,” the firm said.
Main image: milada-vigerova-PE8srY2bDOs-unsplash
