Chancellor Rachel Reeves has no plans to reduce the tax-free lump sum, according to Treasury officials.
The announcement provides temporary reassurance to pension savers after weeks of speculation that the 25 per cent allowance could be cut or capped.
Currently, individuals can withdraw up to a quarter of their pension pot tax-free, subject to a lifetime cap of £268,275. While the Treasury has confirmed no immediate changes, advisers warn that uncertainty may persist without a clear government commitment to pension tax stability.
But financial advisers have already seen a rise in client enquiries amid the speculation. DeVere Group reports a 45 per cent increase in questions about accessing tax-free cash over the past month.
Meanwhile, AJ Bell has renewed calls for a Pension Tax Lock, which would guarantee no changes to tax-free cash or pension contribution relief for the remainder of this Parliament. The firm argues that repeated Budget speculation undermines confidence in long-term saving and can prompt rushed or irreversible financial decisions.
A petition launched by AJ Bell in October has gathered more than 20,000 signatures. The Government responded on 22 October, outlining its broader pensions reform agenda but did not commit to a formal tax stability guarantee. The Petitions Committee has since requested a revised response from the Treasury.
AJ Bell director of public policy Tom Selby said leaving tax-free cash unchanged was “good news” for savers, but added that ongoing uncertainty could affect confidence in long-term saving.
The Government maintains it is committed to a “strong, fair and sustainable” pensions system and has launched a two-phase review, including a new Pensions Commission, to examine long-term reforms.
