Frequent policy changes 'undermining' long-term financial planning

Frequent changes to investment, savings, and pensions policy are discouraging long-term financial planning, the Investment Association (IA) has warned.

Publishing its submission ahead of the Budget, the IA said that continued uncertainty over policy was undermining the confidence needed to support people with planning for retirement and unlock investment in the UK.

Its polling found that 38 per cent of people believed changing UK pensions policy made it harder to plan for the future, while 34 per cent were concerned that pension tax benefits would be reduced following the Autumn Budget.

A third (33 per cent) said they would save more into their pension if they believed the tax rules would remain broadly stable throughout their working life.

The IA argued that uncertainty, particularly in the run-up to a Budget, over the future direction of the pensions tax regime could damage people’s ability to plan and invest over the long term.

With state pension expenditure projected to rise sharply over the coming decades, the association stressed that private pensions would need to play an increasingly important role in providing retirement security.

It therefore urged the Chancellor to commit to a stable, long-term framework for pensions taxation and work with the industry to establish a set of principles governing the taxation of pension savings.

According to the IA, these principles should give savers confidence that the tax treatment of every pound contributed to their pension will be easy to understand and will not fundamentally change during their lifetime.

The submission also called on the government to avoid further increases to capital gains tax, warning that doing so would contradict efforts to encourage people to move from cash savings into long-term investments.

The IA highlighted that UK retail investors withdrew £4.5bn from investments in October 2025, the final full month before the previous Budget, including £1.4bn from UK equities, amid speculation over possible tax changes.

Commenting on the submission, IA chief executive officer, John Owen, said: “Britain’s ageing society is becoming increasingly expensive. The state pension alone can no longer be expected to provide the retirement income future generations will need, so robust and trusted private pensions must fill the gap.

“However, private pensions can only work if people are encouraged to save and invest throughout their working lives. Policy uncertainty damages confidence, drives short-term decisions and risks discouraging future generations from saving for retirement.

“With the Exchequer managing an increasingly stretched economy, it simply cannot afford for people to turn their backs on private pensions and become more reliant on public support in retirement.

“This Budget must therefore give savers long-term certainty, remove taxes that hold back investment and strengthen the pensions system on which Britain’s future retirement security depends.”

This article originally appeared in our sister publication Pensions Age.

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