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Pension savers could make irreversible decisions with their retirement money amid fears of tax changes

John Healey has been issued a fresh warning over pension tax uncertainty amid fears savers could make potentially irreversible decisions with their retirement money.

Billions of pounds have already been pulled from pension pots amid speculation over possible tax changes, raising concerns that another wave of withdrawals could follow ahead of the October Budget.

Investment platform AJ Bell has submitted proposals to the Treasury urging the Chancellor to guarantee stability around two key pension benefits: tax-free cash and tax relief on contributions.

The company wants the Government to commit to maintaining these incentives for the duration of this Parliament, arguing that repeated speculation about potential tax changes is causing savers to make decisions they may later regret.

AJ Bell's analysis of Financial Conduct Authority data suggests around £10billion more was withdrawn as tax-free cash from pensions around the 2024 Budget than would otherwise have been expected.

The platform believes uncertainty over possible pension tax changes contributed to the surge and warned that similar behaviour may have occurred around the 2025 fiscal event.

It is now concerned that speculation ahead of Mr Healey's October Budget could trigger another rush to withdraw retirement savings unless the Government provides greater certainty.

Michael Summersgill, chief executive of AJ Bell, said: "Savers lit a £10billion distress flare at the 2024 Budget, which was never extinguished.

"To avoid another damaging repeat, Chancellor John Healey must side with savers by committing to pension tax stability now."

Mr Summersgill said such a commitment would not require additional Treasury spending and argued that ending uncertainty would help protect household finances and the wider economy.

"The Chancellor should be laser-focussed on boosting growth and getting households onto a sound financial footing," he added.

"Ending a phenomenon that has seen tens of billions taken out of investments and parked in cash should be right in his crosshairs."

The Budget submission forms part of AJ Bell's long-running Pension Tax Lock campaign, which calls on the government to guarantee stability on two fundamental pension tax incentives: the ability to withdraw a lump sum tax-free and tax relief on contributions.

The platform has argued that persistent speculation about changes to these benefits erodes confidence in the pension system and pushes people into making irreversible financial decisions driven by anxiety rather than their long-term goals.

A parliamentary petition backing the campaign, launched by AJ Bell in 2025, rapidly gathered more than 20,000 signatures from members of the public and financial advisers.

It demanded that the government commit to maintaining current levels of tax-free withdrawals and contribution relief.

AJ Bell contended that such uncertainty also undermines the government's own ambitions to improve pension adequacy and encourage greater investment in the UK economy.

Beyond pensions, AJ Bell's submission also urged Mr Healey to reconsider the complicated ISA overhaul introduced by his predecessor, suggesting a simpler approach would better serve savers.

The investment platform called on the Chancellor to explore pragmatic alternatives to the plan to bring pensions within the scope of inheritance tax, a policy that has drawn widespread criticism from the savings industry.

AJ Bell additionally highlighted the negative impact of stamp duty on share purchases, arguing that the levy actively discourages investment in UK-listed companies.

The platform said the Chancellor should turn his attention to taxes that work against the government's stated aim of channelling more capital into British businesses and driving economic growth.