Chancellor Rachel Reeves is facing calls to protect pension savings from HM Revenue and Customs (HMRC) following last month’s Budget, which unveiled a £2,000 cap on tax-free salary sacrifice pension contributions and the Labour Government’s commitment to the triple lock.

Ms Reeves branded pre-Budget leaks and speculation "unacceptable" when questioned by the Treasury Committee today. Her remarks came amid ongoing scrutiny of the Government’s handling of fiscal announcements and the persistent rumours that precede them.

Pension tax-free cash has become one of the most enduring subjects of speculation before each Budget, with industry figures reporting significant numbers of savers withdrawing from their retirement funds ahead of the last two fiscal events.

The Chancellor’s comments have drawn a sharp response from investment platform AJ Bell, which has accused the Treasury of contributing to the very uncertainty Reeves now criticises.

Rachel Reeves and worried woman | Source: GETTY

Tom Selby, the director of Public Policy at AJ Bell, said the Chancellor’s expressed frustration should be viewed sceptically.

"It’s difficult not to take the chancellor’s ‘frustration’ over the ‘damaging’ speculation ahead of the Budget with a pinch of salt," he stated.

Mr Selby argued the Budget was preceded by what he described as "a seemingly endless parade of gloomy economic warnings in what felt like the longest build-up to a fiscal event in living memory."

He maintained that much of the speculation stemmed directly from the Treasury’s own failings, pointing to the department’s inability to provide certainty for those saving and investing.

RACHEL REEVES | Source: GETTY

AJ Bell mounted a substantial campaign urging the Labour Government to adopt a pension tax lock before the Budget, a commitment that would protect key retirement saving incentives including tax-free cash and tax relief on contributions for the remainder of this Parliament.

Based on these concerns, the firm launched a parliamentary petition supporting the measure, which gathered more than 22,000 signatures within weeks.

The petition states: "The Chancellor should introduce a pension tax lock: a commitment not to reduce the amount people can withdraw from their pension tax-free or the amount of tax relief given on pension contributions.

"We believe this would help ensure retirement savings are protected and people can save with confidence

Mr Selby highlighted that Reeves’ unprecedented televised address from Downing Street, which strongly suggested income tax increases were imminent just weeks before the Budget, ultimately amounted to nothing.

Despite the widespread concern, both pension tax-free cash and contribution tax relief emerged from the recent Budget without changes.

Following the Chancellor’s fiscal statement, Mr Selby urged the Chancellor to take decisive action rather than remaining passive on the issue of pension tax speculation.

"Although both pension tax-free cash and tax relief on pension contributions came out of the recent Budget unscathed, many people will have already made decisions based on pure speculation, and there remains a huge risk that the same rumours will re-emerge ahead of the next Budget, he said.

Pensioner looks at tax bill | Source: GETTY

"The Chancellor does not need to be a passenger when it comes to pension tax speculation she could take a firm grip by committing to stability over the long term, a pledge which would cost the Government nothing and show it is firmly on the side of people who do the right thing and save for their financial future."

He warned that many savers had already made decisions based purely on rumour, and that without a formal commitment, the same damaging speculation would likely resurface before the next Budget.

In response to the petition, a Government spokesperson said: "The Government is committed to ensuring pensioners have security in retirement and has launched a Pensions Commission to look at what is required to ensure the system is strong, fair and sustainable."

If the the petition receives 100,000 signatures, it will be considered for a debate in Parliament among MPs.

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