London (Parliament Politics Magazine) – Pensions Minister Torsten Bell refuses to rule out pension tax changes, citing the need to fund public services and end Britain’s economic “doom loop.”
As reported by The Telegraph, Torsten Bell has declined to rule out changes to pensions in the Budget, as fears grow over a possible cut to the tax-free lump sum.
What did Torsten Bell say about pension taxes and budget reforms?
Torsten Bell, speaking in London, described last year’s tax measures on the middle class and wealthy as “difficult … but fair choices,” saying they were necessary to break the economic “doom loop.”
When questioned about potential pension taxes, Mr Bell responded, “I am not going to start commenting on budgets.”
Last month, the former Resolution Foundation chief, Mr Bell, was promoted to lead Chancellor Rachel Reeves’ Budget planning. He has pushed for significant pension reforms, including reducing the tax-free lump sum and ending the triple lock.
Last month, it emerged that Ms Reeves may lower the amount pensioners can withdraw tax-free from their pots, as she aims to fill a shortfall in public finances.
Mr Bell rejected the claims, calling them “a lot of nonsense.” He cited the Chancellor’s raids on families and businesses in last year’s Budget, stating that more funds are needed to support public services.
The pensions minister stated,
“Judge the Government on what it has done – look back to the Budget last autumn, that is where you can start to see what the Government has done, which is to make some difficult choices, but make some fair choices, whether it was on inheritance tax or capital gains tax or on non-doms or on private jets or on private schools.”
He explained, “Why are we doing this? To break the doom loop,” noting that the revenues will help shorten NHS waiting lists and boost policing.
Mr Bell, during his time at the Resolution Foundation, urged a £40,000 cap on the tax-free lump sum, which could generate up to £2bn a year for the Treasury.
Over the past year, the think tank played a key role, providing staff and supporting its former chief’s rapid rise as a new MP.
According to Mr Bell, pension freedoms giving savers control over their pots need to be reformed.
He slammed the existing pension system, introduced under the Conservatives, as “mad,” saying pensioners must estimate their lifespan to calculate how much they can spend.
Mr Bell added that a similar system in Australia has left pensioners fearing they might run out of money, causing them to spend less and lowering their standard of living in later years.
What did the CBI boss urge Rachel Reeves to do on taxes?
Ahead of the autumn Budget, the head of the Confederation of British Industry called on the Chancellor to scrap Labour’s pledge to avoid tax hikes for workers.
Rain Newton-Smith said the “time for tinkering is over”, urging Rachel Reeves not to rigidly follow tax commitments made during last year’s election campaign.
She stated,
“The fact is that geopolitics and global markets have shifted. The world is different from when Labour drafted its manifesto, and when the facts change so should the solutions.”
Ms Newton-Smith added,
“The Chancellor cannot raid corporate coffers again so she must look elsewhere, embracing long-term strategic tax reforms rather than maintaining a slavish adherence to manifesto promises on tax or ideas based on the world as it was 18 months ago.”
Rachel Reeves’ views on boosting growth and helping businesses
Rachel Reeves stated,
“Our economy isn’t broken, but it does feel stuck. That’s why growth is our number one mission. We want to see thriving high streets and small businesses investing in their future, not held back by outdated rules or strangled by red tape.”
She added,
“Tax reforms such as tackling cliff-edges in business rates and making reliefs fairer are vital to driving growth. We want to help small businesses expand to new premises and building an economy that works for, and rewards working people.”
Key facts about taxes on pensioners in the UK
Pensioners must pay tax if their total income exceeds £12,570. Contributions to pensions get tax relief up to £60,000, with new rules from September 2025.
Low-income pensioners may qualify for Council Tax Reduction. Those on Guarantee Credit could have their Council Tax fully covered. Other income, like savings or part-time work, can affect eligibility for these benefits.