The boss of Aviva has urged Andy Burnham to rule out a pension tax raid amid growing uncertainty for savers. Amanda Blanc, the chief executive, said the Prime Minister should seek to quell pre-Budget speculation because it prompts people to withdraw cash from their retirement pots unnecessarily. In the run-up to last year's Budget, rumours of changes to pension tax-free lump sums led to billions being withdrawn over fears savings could be targeted.
Ms Blanc said: "We don't want to see, every week, new things in the press about what might happen when in the run-up to the Budget. "That [would not be] very helpful because what we don't want is for customers to make decisions that in the long run they regret and when policies are not changed." She said she would support calls for the Government to pre-emptively rule out changes to the pension tax-free lump sum to limit damaging speculation before the next Budget. "We should be encouraging people to save into their pension and to keep the money for their retirement.
We shouldn't be double-taxing people," she added. Mr Burnham is under pressure to raise taxes in his Government's first Budget on Oct 28. Forecasts from Capital Economics suggest the Prime Minister could be forced to increase taxes by £25bn to help balance the books.
This could include ending the tax-free lump sum or capping it at £100,000, down from £268,275, thereby raising £2bn for the Exchequer, according to Capital Economics forecasts. Mr Burnham has committed to maintaining key pension policies, such as the triple lock, but has failed to rule out changes to pension tax relief or the scrapping of the tax-free lump sum. Last month, major savings giants AJ Bell, Standard Life, Royal London and Hargreaves Lansdown wrote an open letter calling on John Healey, the Chancellor, to rule out an end to tax-free lump sums.
They said speculation was leading to a "damaging cycle of uncertainty" for pension savers. In the first half of the year, Aviva announced a 24pc increase in operating profit to £1.3bn and unveiled plans for significant investment in AI, including the rolling out of our AI-enabled claims agent. Ms Blanc said it was too soon to know what the implications of its investment in AI would be for the number of people Aviva employs.
"What I think you will see is maybe the types of roles within the business will change. So, you may get more data scientists, more engineers and maybe fewer roles that are outsourced in the more routine tasks," she said. While insurance payouts from the UK wildfires had little effect on Aviva, the effect was more pronounced in Canada, where the insurer also operates.
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