AJ Bell has urged the government to commit to retaining key pension tax incentives and end speculation over the future of tax-free cash and tax relief.
The wealth manager launched a parliamentary petition on 1 October calling for a public commitment to a “Pension Tax Lock”, pledging not to alter tax-free cash entitlement or pension tax relief for the duration of this Parliament.
The petition (which you can sign, as I have by clicking the link) has already attracted more than 4,000 signatures and will require 10,000 to trigger a government response.
AJ Bell said a formal commitment would provide much-needed certainty for savers, allowing millions to plan for retirement with confidence.
The firm has long campaigned for a Pension Tax Lock, but the new petition invites customers, advisers, the wider public, and industry stakeholders to back the cause directly.
Tom Selby, director of public policy at AJ Bell, said: “When people save in a pension, they enter into a tax pact with the government. Take-home pay today is sacrificed for the long term, on the proviso that it will instead be taxed on withdrawal and comes with the added benefit of a 25% tax-free element.
“That is the foundation upon which the retirement plans of millions of Brits are built and requires a firm commitment to stability from government, matching the long-term financial decisions of savers making preparations for retirement.
“Committing to a Pension Tax Lock would show government is serious about a fair deal for workers, allowing today’s savers to enjoy the same pension tax incentives as their parents. It would also lay down the gauntlet to any future government tempted by a pension tax raid, offering genuine security to savers through a policy commitment that doesn’t require any increase in government spending.”
Selby added that stability would also benefit the wider economy by encouraging people to save more, leading to greater investment in UK businesses.
AJ Bell warned that continued speculation about changes to retirement incentives undermines public confidence and risks prompting people to make irreversible financial decisions based on fear rather than long-term planning.
The firm’s proposed Pension Tax Lock calls for government to protect two key pillars of the pensions system:
Tax relief – maintaining the principle that pension contributions receive tax relief at an individual’s marginal rate, with tax paid on withdrawal in retirement.
Tax-free cash – preserving the right to take 25% of a pension tax-free, up to the current maximum of £268,275.
AJ Bell said maintaining these core incentives would reinforce personal responsibility and strengthen the UK’s long-term savings culture.
Please feel free to pass this to anyone you think might find it of interest…..and who might be inclined to sign the petition!
As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.
Yours sincerely,
Graham Ponting CFP Chartered MCSI
Managing Partner
