Government has potential to boost investment and build financial resilience, but must deliver pension confidence through tax stability in Budget

Ahead of the Budget, the UK investment management industry has today called on the government to deliver greater pension confidence through tax stability to help people better plan for their retirements.

The most significant investment most people will make in their lifetime is their pension, with UK households holding £2.3 trillion in workplace defined benefit and contribution schemes.¹ But, according to recent research from the Investment Association (IA) and Opinium, with just 1 in 5 (24%) UK adults confident that the state pension will be enough to live on in retirement, it is more important than ever that people are encouraged to save into their own pensions.² To enable this, it is essential that government delivers certainty around pension tax policy, so that people can plan for their retirements and have the confidence to invest.

The current lack of tax stability is translating into real world concerns. The IA’s research also found that more than two in five (42%) agreed that changing pensions policy makes it more difficult to plan for the future. Over a third (37%) are worried that their pension tax benefits will reduce following this Autumn’s Budget. This issue has become especially clear as pension providers have seen a 62% increase in the value of tax-free lump sums taken in the last year.³

The IA has therefore proposed to work with government to develop a clear and overarching set of principles which can offer consumers political, legislative and systemic certainty that their pension will be taxed in a way which they can easily understand and will not fundamentally change over the course of their lifetime.

To boost investment, the IA has also called for the government to:

• Support UK equities by removing stamp duty on shares - this currently creates a significant barrier to the UK’s competitiveness, acting as a disincentive to invest and reducing returns for every pension fund reinvesting in UK shares.
• Cement inclusive investment by continuing to work with industry on the measures bought forward by the Leeds Reforms, such as the industry-led retail investment campaign and review of risk warnings on investment products.
• Take steps to improve financial literacy including through ensuring that the new school libraries that the government has announced will contain books which boost children’s financial literacy.

Chris Cummings, Chief Executive of the Investment Association, said: “Investing has a pivotal role to play in helping people provide for their retirement and achieve their long-term financial goals. The Leeds Reforms were an important step forward to strengthen the UK’s investment culture and will lead to better outcomes for UK households and wider economy. However, building a nation of investors requires certainty and trust. That’s why we’re calling on the government in this Budget to deliver pension tax stability, so that people know they can rely on the money they’ve invested today, to fund their retirement plans in the future.”

^{1 IA estimates based on PPF 7800 Index, Isio Low-Risk Funding Index, PPI DC Future Book}

^{2 See Notes to Editor on research methodology}

^{3 Financial Times, 5th September 2025. Sharp rise in UK pension lump sum withdrawals over tax concerns}