Protect pension tax certainty: sign the petition

The petition for a Pension Tax Lock has passed 20,000 signatures, and MPs are pressing the Treasury for a clearer commitment.

What’s happened so far?

AJ Bell’s petition calling for a Pension Tax Lock – a call for the Government to commit not to change the rules on pension tax-free cash or tax relief until at least the remainder of this Parliament – has passed over 20,000 signatures in just a few weeks. That level of engagement shows how deeply people care about stability in pension rules when it comes to planning for their future.

Petitions Committee pushes back on Treasury response

Less than two weeks after the Treasury opted to side-step the issue of a Pension Tax Lock in its response to AJ Bell’s petition, the Petitions Committee has asked for a revised reply.

The Committee – a group of MPs who oversee the petitions system – felt the Government didn’t directly address the petition’s request for certainty.

In its original response, the Treasury pointed to the revived Pensions Commission, which will review:

• adequacy;
• fairness; and
• sustainability in the UK pensions system.

However, it neither gave assurance on tax incentives nor refused to commit to anything ahead of the Budget.

That omission has done little to ease the nerves of hard-working pension savers, especially with another Budget tipped for tax rises.

Why certainty matters for your clients

Changing pension tax rules erodes trust and makes planning harder. A simple promise not to move the goalposts, at least until the Pensions Commission published its report, would allow savers to plan for retirement with confidence. It would also give the Government a much-needed positive headline ahead of the Budget and support Rachel Reeves’ stated aim of boosting pension adequacy and encouraging investment in the UK stock market.

Government response – acknowledgement but no commitment

The Government’s response can be found on the petition page.

The Treasury did at least acknowledge the importance of the pension tax pact – the deal under which savers defer income tax until retirement and receive a 25% tax-free entitlement.

However, focusing on the gross cost of pension tax relief (£78 billion in 2023/24) misses the point.

• This is a deferral system, not a giveaway.
• Pension savers pay tax on income in retirement.

The system helps:

• reduce reliance on the state;
• smooth tax revenues; and
• support the consumer economy.

Changing the rules before people retire would be a betrayal of those still working hard to build up their pension pot. They deserve the right to retire on the same terms as the generation before them.

The role of the Pensions Commission

The Pensions Commission will play a pivotal role in shaping the future of retirement saving. It’s right to look at under-saving, especially among groups like the self-employed. But nowhere in the terms of reference does it say the Commission will review tax incentives. Its focus should be on pension adequacy – ensuring everyone has enough to fund a decent retirement. Ripping up the pensions tax rulebook will only damage confidence and do nothing to help people save more.

Keeping up the pressure

AJ Bell will continue to campaign for the Government to deliver the certainty to savers that a tax lock would provide.

The petition remains open, and more signatures will strengthen the case for a clear tax lock.

We’ve also written an article for your clients explaining the background to the petition. Please feel free to share it with anyone who may want to add their support.

Sign the petition.