Labour's plan, announced in January, will allow companies to extract excess money from well-funded pension schemes. However, any money taken will be subject to a 25% tax, meaning the Treasury would collect £2.5bn for every £10bn withdrawn.The funds being used for a variety of purposes - such as increasing shareholder dividends, investing in growth or shoring up balance sheets. According to consultants Hymans Robertson, around £160bn could potentially be accessed across the UK’s defined benefit schemes.Stephen Lowe, director at retirement specialists Just Group, has said "Most commentators have been fixated on how this surplus is going to be funnelled into building UK reservoirs and bridges, but they've missed a more immediate benefit the Chancellor is targeting—tax revenue."COMMENT NOW - Do you trust Rachel Reeves and Labour to protect your pension?
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00:00You trust the government with your money.
00:02Well, a new poll has revealed that 70% of over 55s feel that their financial security is under threat.
00:10Well, 40% of those polled also revealed they plan to withdraw money from their pension pots.
00:16Not surprising, is it, to be honest, the way things are at the moment.
00:19Let's talk to the CEO of Tally Money, Cameron Parry.
00:22Good to see you this morning.
00:25I mean, there's a lot of changes going on at the moment.
00:28Is that just undermining people's faith?
00:31Yeah, that's right.
00:32We conducted research this month on over 2,000 over 55s.
00:38And, yeah, we found a whopping 93% felt that this Labor government wasn't going to protect their pensions.
00:48And there's an upcoming spring budget.
00:50People are concerned about this.
00:51And, you know, we've sort of seen the economy go in a different direction to what the last budget was based, you know, relied on.
00:57So, yeah, people are concerned.
00:59They're worried they've worked all their lives, built up some wealth, and now there's a bit of a money grab coming from the government.
01:06So, what do they fear the government will do with their pension?
01:10Because they can't take it off them if it's a private pension.
01:12But is it all about how it's taxed and also how it can be passed on to family?
01:17Yeah, that's right.
01:17It's a combination of inheritance tax rules, changes, limits, and when they can apply tax there.
01:24It comes into effect when you die.
01:28It has an effect the age that you die.
01:30So, yeah, whether your estate needs to pay inheritance tax – sorry, whether your estate is taxed with death tax on what you leave and then whether your beneficiaries actually pay income tax, their income tax rate, on what you bequeath them.
01:45So, and that has a – there's a line in the sand whether you die before 75 or after 75.
01:51So, yeah, how you deal with your money, the tax benefit, you know, how you've been incentivised to hopefully build up a pot of wealth for you and your family so that you're not a burden on society, you're not a burden on the taxpayer.
02:04You're at the end of your income-generating life and so you can't adapt.
02:09If they change the rules, it really is – people are concerned that they won't have enough.
02:15And your poll also found that 40% of people revealed to withdraw money from their pension pots.
02:23What do you think that's about?
02:24Is that people quite literally not having enough to make ends meet, having to dip into their pension pot early?
02:29Or is this the issue of trust again, not trusting that pension pot?
02:32Yeah, it's more to do with people who have a bit more and have the means.
02:38They will go and sort this out and try and try, even if the rules change, try and adapt to that as best they can.
02:46They're motivated to obviously protect their money.
02:50It is, you know, as always in these type of things, it is the poorest who don't have resource that end up getting hurt the most.
02:57Yeah, we found 60% realise that they – subject to rule changes, they will make a move or they realise they will have to.
03:06But we found 93% of the participants in the survey, they felt that they were not – this Labor government would not protect their pensions.
03:16And a whopping 8 out of 10 actually felt that they're deliberately being punished.
03:22You see, this is the problem because for a long time a lot of people have been encouraged to invest in their pension, not just for old age, but because it's a good tax-efficient investment route.
03:35And now that's all changing.
03:37So after years and years and years of people saying, put in your pension, put in your pension, it's now targeted.
03:42Yeah, that's right.
03:43And again, people are trying to be self-responsible.
03:46They're not just sitting back and relying on the government to, you know, make good decisions in their interests all the time.
03:52And indeed, you could probably argue, particularly of late, that even, you know, more so the opposite is happening.
03:58But that's right.
03:59I mean, that's the unfairness of the whole thing.
04:01You try and build something up so you're not a burden on your family, society, and then they change the rules when you can no longer adapt to that.
04:09And it's, yeah, it's all sorts of problematic and, you know, undermining of confidence, undermining of spending.
04:17It doesn't flow into what the growth sort of priority that this government speaks about.
04:22It's just wrong.
04:23OK.
04:24Cameron, good to see you.