Bestinvest reported a tenfold increase in SIPP contributions in September compared to the same period of 2023, as pension investors grow increasingly nervous about the upcoming Budget.
While it’s not unusual for savers to ramp up contributions towards the end of the tax year, Bestinvest said September had seen an “unprecedented surge” in pension contributions, with August also seeing a quadrupling of contributions.
Bestinvest has also seen the number of pension withdrawal requests double in September this year compared to the same month in 2023, a surge primarily driven by people accessing their 25% tax-free lump sum amid growing speculation that the current sum of £268,275 could be either scrapped or reduced as the government seeks to plug the £22 million black hole in its finances.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said savers have grown fearful of “radical new pension rules” being unveiled by Chancellor Rachel Reeves in this month’s Autumn Budget.
Haine said: “Rumours that pensions tax relief was in her sights, with the potential a flat rate of 30% would be imposed, had a dramatic effect on saving behaviour with clients choosing to funnel large sums into the SIPPs to get ahead of any changes.
“The knock-on effect of all this speculation and uncertainty is clear to see with people drastically altering their pension saving behaviour, whether by upping contributions into SIPPs or even bringing forward major life decisions by requesting their tax-free lump sum early as they digest the full implications of potential pension changes on their personal finances.”
Haine said other rumours including that the Chancellor could turn her focus to employers, with the potential to cut employers’ relief on National Insurance contributions, could also have unintended consequences by placing additional burden on businesses who might choose to reduce headcount or stick to the auto-enrolment minimum rather than extend it to curb costs.
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