The chief executives of Aviva and Aberdeen have urged the chancellor, John Healey, to prevent leaks about possible tax changes ahead of his first budget on 28 October, warning that speculation before the last two budgets prompted savers to pull money out of their pensions.
Dame Amanda Blanc, chief executive of Aviva, the FTSE 100 insurance and savings group, said she had asked Healey directly not to “fly kites”, the practice of leaking potential policies to gauge the reaction of the public and markets, and to crack down on rumours about the measures he might announce.
Blanc said she raised the issue at a breakfast meeting last month between the chancellor and the bosses of some of the UK’s leading companies.
“I made the point to say please don’t do that, and he made the commitment that they weren’t going to do that, so I hope that that is the case,” she said. “What we don’t want is for customers to make decisions that in the long run they regret when policies are not changed.”
Jason Windsor, chief executive of Aberdeen Group, the FTSE 250 investments and savings company, said: “This new government needs to engage the industry properly to avoid unnecessary and damaging speculation to people’s pensions that has dogged the last two budgets.”
Both budgets under Rachel Reeves, Healey’s predecessor, were preceded by intense speculation, in particular rumours that the government would cut tax-free pension lump sum withdrawals. Under the current rules, savers can from the age of 55 draw down 25 per cent of their pensions tax free, up to a limit of £268,275.
On both occasions the Treasury left the allowance unchanged. Wealth management companies have said the atmosphere was nonetheless damaging because it led some clients to rush to take advantage of the lump sum rules before any change could take effect.
Blanc, who was speaking as Aviva posted bigger than expected first-half profits, said “it was a significant amount of money that was taken out” of retirement pots by customers concerned that Reeves would lower the cap on withdrawals. Aviva oversees £261 billion of assets in its wealth division.
Aberdeen manages about £579.4 billion across its fund management and wealth businesses.
Steven Levin, chief executive of Quilter, the wealth manager that oversees £154.5 billion, said: “Persistent speculation about changes to pension tax rules can create uncertainty and drive behaviour that is not always in savers’ best interests.”
Michael Summersgill, chief executive of AJ Bell, which runs a DIY wealth management platform, wrote to Healey last month asking him to make “an early, public commitment” to leave pension tax-free cash entitlements untouched. He said the chancellor should “act quickly” to avoid a repeat of the “damaging instability” that preceded the last two budgets. AJ Bell has previously reported that customers withdrew about £600 million from their pensions during speculation ahead of the most recent budget.
Blanc has also criticised pension tax measures floated before earlier budgets, including a proposed cap on salary sacrifice schemes.
A Treasury spokesman said: “As has always been the case, the chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”
