Amanda Blanc, the chief executive of insurance giant Aviva, has called on the UK government to cease speculative discussions about potential tax increases on pensions, urging Chancellor John Healey to provide clarity ahead of the upcoming Budget. Blanc stated that previous rumors about reducing the tax-free lump sum had led to significant and potentially regrettable withdrawals by anxious savers.
In the lead-up to the previous year's Budget, speculation that the tax-free pension perk would be altered caused many individuals to withdraw funds from their retirement accounts. Rachel Reeves, who was the Chancellor at the time, ultimately maintained the tax-free lump sum limit at £268,275.
"Customers would have been better to wait and see what the Government was going to do," Blanc said. "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 emphasized that the government should be encouraging pension savings, not imposing what she described as "double-taxing people."
Aviva recently reported a 24 percent increase in its first-half operating profit, reaching £1.3 billion and surpassing analyst expectations. The company attributed this performance in part to the integration of Direct Line, a home and car insurer acquired last year for £3.7 billion, which is progressing well. Aviva has also indicated potential job cuts as part of its cost-reduction strategies and has raised its interim dividend to shareholders by 7 percent.
The Treasury responded to the concerns by stating that Chancellor John Healey will announce his decisions "at fiscal events, rather than routinely commenting on rumour, speculation or proposals."
Separately, Aviva is preparing to increase its reserves to cover an anticipated surge in subsidence claims, attributed to the ongoing heatwaves. The insurer paid out £72 million in domestic subsidence claims between April and June, with the average payout reaching a record £20,000. Subsidence is typically caused by soil losing moisture and shrinking during prolonged dry periods, a process exacerbated by heatwaves and the water drawn from the ground by trees.