The chief executive of Aviva, Amanda Blanc, has urged Chancellor John Healey to rule out a tax raid on pensions ahead of the upcoming Budget to stop savers making hasty withdrawals from their retirement pots.
Blanc warned the Labour Government against flying kites over potential tax changes, following persistent rumours ahead of last year's fiscal statement that prompted significant numbers of anxious savers to drain money from their pensions needlessly.
The insurer warned that decisions made by panicked savers to withdraw funds could not be reversed, leaving individuals potentially worse off over the long term.
In the run-up to the previous Budget, widespread speculation suggested Ministers were considering slashing the tax-free pension lump sum. Rachel Reeves, Chancellor at the time, ultimately chose to leave the tax-free withdrawal limit capped at £268,275.
Under UK pension rules, savers are generally permitted to take up to 25 per cent of their total retirement pot as a tax-free lump sum once they reach pension age, up to the statutory cap.
"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 added.
Blanc said the Government should be encouraging people to save into their pension rather than double-taxing people.
Responding to the comments, the Treasury stated that Chancellor John Healey will set out his decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.
Aviva financial results and job cuts
The intervention came as FTSE 100 group Aviva unveiled a 24 per cent surge in first-half operating profit to £1.3 billion, beating forecasts made by City analysts.
Blanc described the financial performance as very strong and reported that the integration of home and car insurer Direct Line was making very good progress following its £3.7 billion acquisition last year.
London-listed Aviva is one of the largest financial services providers in the UK, offering life insurance, general insurance, and asset management services to millions of retail and corporate customers.
The insurer previously signaled that up to 2,300 jobs could be cut as part of broader cost-cutting plans following the Direct Line takeover. Meanwhile, shareholders received a boost as Aviva raised its interim dividend by 7 per cent to 14p per share.
Heatwave drives subsidence claims surge
Aviva, which is Britain's biggest home insurer, also announced plans to top up its reserve funds to handle an expected surge in subsidence claims as the country endures its sixth heatwave of the summer.
"We will definitely have to look at our reserves," Blanc said yesterday, without specifying how much extra capital might be required.
The move follows a steep rise in claims and compensation payouts linked to the long, hot summer across the UK. Insurers paid out £72 million in domestic subsidence claims between April and June as the heatwave took hold, with the average payout reaching a record £20,000.
Subsidence occurs when the soil beneath a building's foundations loses moisture and shrinks, particularly in clay-heavy ground during prolonged dry spells. Tree roots can also contribute to ground shrinkage by drawing large volumes of water from the soil.
