There is an irony in Paul Johnson’s article in the Times which I hope I capture in my tweet

But remind me who started the speculation about the cropping of the pension tax-free lump sum and scrapping of IHT privileges of pension pots? https://t.co/oqTO3S5e0D

— Henry Tapper (@henryhtapper) October 29, 2024

There is a further irony that the Labour manifesto was supposed to quell concern that Labour would  tax and spend.

In a couple of hours we will know who will be taxed and what will be spent but in the 120 days since the election there have been major changes in people’s financial planning, all heading in the wrong direction for a Government intent on investment

1. Individuals are selling shares to realise gains prior to the budget – forestalling CGT hikes
2. People are withdrawing cash from their pension pots, forestalling forecast restrictions on tax-free cash

Sadly , I hear of no evidence (anecdotal or otherwise) of people sacrificing salary or bonus for pension to avoid corporate NI. Of course not, there are rules about such things.

In short, the budget lead-up has led to uncertainty and much of that uncertainty is caused by people assuming that Paul Johnson has a hot-line to number 11 (me included).

As I have said many times, there are occasions when the risks of fiscal change outweigh the cost of not sticking with one’s convictions. I am already regretting not being invested for the part of my pension pot I encashed to pay off my mortgage and this sense of loss will increase if the Chancellor leaves tax free cash alone.

I can agree with Paul Johnson’s call on Rachel Reeves while asking whether he was the best person to make it.

What is most important is a clear statement of intent for the remainder of this government’s time in office. Whatever the scale of tax rises announced on Wednesday, the public finance situation is unlikely to become easy any time soon. That will mean speculation before every fiscal statement about whether a pension tax raid is in the offing. The only way to avoid that is to state unequivocally now what will or won’t happen over the coming period.

For the record, I think that pensions should be pensions and that the tax-free cash element should be frozen or reduced. I think that pensions should not be used to mitigate IHT and I would like to see those who convert their pension pot to pension being rewarded for doing so by a guarantee that they will not suffer adverse taxation in years to come. I am thinking of the taxation of pensions as opposed to drawdown and especially the threat of NI on pensions.

The past three months have been unproductive in terms of saving as people worry about its consequences.

Instead of investment, we have been thinking about tax and national insurance.

Britain should be looking to put more of its money into the long-term assets that support pensions and be less concerned about the short-term impact on their self-assessment of their taxes.

Whatever the endgame of this budget, we will at least have some certainty by this afternoon, we cannot have any more budgets where speculation is running wild.