As a financial adviser, I’m used to helping clients make decisions in uncertain times, but the lead-up to the autumn Budget always brings a unique set of challenges as we find ourselves amid a swirl of unhelpful rumours and conjecture.
This year has been no exception. With the government having so far stuck rigidly to its manifesto pledge not to raise income tax, National Insurance or VAT, speculation has inevitably shifted to other areas, and pensions are once again in the firing line.
The lack of clarity is causing real anxiety. I’ve had clients calling in a panic, convinced that the tax-free cash option is about to be scrapped.
One even told me they’d heard it on “good authority” and wanted to access their pension immediately, despite no change in their personal circumstances. These kinds of decisions can be irreversible and potentially damaging.
We’ve seen this before. Speculation around pension tax changes leads to confusion and poor decision-making. When people act on rumour rather than fact, they risk triggering unnecessary tax charges or undermining their long-term retirement plans.
The Treasury’s refusal to comment on potential changes leaves a vacuum that gets filled with headlines, misinformation and fear
We are hearing of people trying to reverse withdrawals after realising the implications, only to find they can’t.
The Treasury’s refusal to comment on potential changes outside of fiscal events is understandable, but it leaves a vacuum that gets filled with headlines, misinformation and fear.
Political soundbites often seem designed to test public reaction, and that only fuels the uncertainty. It can be frustrating, given our job is to help people plan with confidence and that’s hard to do when the rules might change overnight.
That’s why I always come back to the golden rule: advice must be based on current legislation. We build plans that are flexible enough to adapt, of course, but we don’t act on rumour.
Unless a client’s personal circumstances have changed, there’s rarely a good reason to make drastic moves, whether that’s accessing pension funds early or shifting investments to cash because of geopolitical fears.
Taking tax-free cash from your pension is a prime example. Many clients come to me believing that they must take the full amount all at once, but that’s not always the most tax-efficient option.
More than anything, what clients need right now is reassurance. The value of advice has never been clearer
Part of my role is helping them understand the nuances and making sure they don’t rush into decisions they might regret.
While pensions are set to come into scope for inheritance tax from April 2027, the exact details remain unclear. It’s sensible to plan around them, but any action should be grounded in actual retirement funding needs, not speculation.
With growing pressure on the state pension, we can expect the government to continue to incentivise private pension saving, so flexibility will remain key.
With hope, some clarity will be provided that provides stability and enables pension savers to plan with greater certainty given the huge number of changes experienced in recent years.
But more than anything, what clients need right now is reassurance. The value of advice has never been clearer – having someone to talk through ideas with, and who can separate fact from fiction, can prevent costly mistakes.
Until the chancellor delivers her statement, we’re operating in somewhat of a fog. As advisers, we must act as a guiding light to help our clients stay calm and informed to ensure they stay focused on, and ultimately achieve, their long-term goals.
Ian Futcher is a financial planner at Quilter
