Chancellor Reeves Eyes Pension Lump Sum Reduction

Rachel Reeves, the Chancellor, is considering reducing the tax-free lump sum that retirees can withdraw from their pensions from £268,275 to £100,000, aiming to generate up to £2 billion in additional revenue. This potential policy shift could significantly impact about one in five retirees, leading to potential legal challenges and public outcry as experts warn it could erode retirees' financial stability. Meanwhile, Reeves has decided against reducing the 40% tax relief on pension contributions, which would have affected public sector workers such as nurses and teachers. This decision comes amid broader fiscal challenges, as Reeves seeks to address a substantial budget deficit without imposing severe cuts to public services. The Treasury continues to explore other measures to balance the budget, including possible changes to inheritance taxes.