Mounting speculation that Chancellor Rachel Reeves may target retirement savings in her November Budget is already sending ripples through financial markets and prompting British expatriates across Europe to explore moving their pensions out of the UK.
Wealth manager deVere Group has reported a sharp rise in enquiries from expats in Portugal, Spain, France and the Netherlands, with savers increasingly considering cross-border pension structures to shield themselves from potential reforms.
James Green, investment director at deVere, said the concern was palpable: “Even the possibility of new or extended taxes on pensions is enough to set serious savers in motion. The conversation has shifted from curiosity to preparation.”
The backdrop is stark. Reeves faces a £20 billion hole in the public finances, with government borrowing costs now at their highest in over a decade. Ten-year gilt yields are hovering around 4.75 per cent, adding billions to the Treasury’s annual debt-servicing bill.
With income tax hikes politically explosive after Labour’s pre-election promises, pensions are seen as an obvious — and tempting — target. Analysts note that past governments have repeatedly turned to retirement savings when fiscal pressure mounts.
In 1997, Gordon Brown famously scrapped the dividend tax credit on pension funds, a move critics dubbed a “£5 billion-a-year raid”. Then in 2010, George Osborne reduced annual pension contribution allowances from £255,000 to £50,000 and cut lifetime allowances.
There has also been successive freezes to allowances since 2021 have quietly dragged more middle-class savers into higher tax brackets — a “stealth raid” by another name.
Against that history, the mere suggestion that Reeves could tighten rules on lump-sum withdrawals, extend freezes or alter inheritance tax treatment of pensions is enough to galvanise expats into action.
One destination attracting attention is Malta, whose EU-recognised pension framework offers flexibility and potential tax advantages. Savers can withdraw up to 30 per cent of their pot tax-efficiently without a lifetime cap, schedule phased income on their own terms, and in many cases keep pension assets outside UK inheritance tax for non-residents.
Portugal’s still-favourable regime, alongside options in Spain and France, also strengthens the appeal for those retiring abroad. “People recognise that Malta’s framework provides protection and efficiency that could prove vital if the UK moves the goalposts again,” Green said.
This trend is not limited to the ultra-wealthy. deVere, which manages retirement planning for 80,000 expatriate clients, is seeing middle-class savers explore transfers too. “Frozen allowances and stealth tax rises have already drawn millions into higher brackets. Even a modest extension of those freezes would hurt many middle-class pensioners,” Green warned.
For Reeves, the political challenge is acute. Any perception of a “pension raid” risks damaging Labour’s relationship with both older voters and professionals in their 40s and 50s saving aggressively for retirement.
Market confidence is also at stake. Green argues that heavy taxation on pensions discourages long-term saving and undermines capital markets: “It weakens the very economy the government aims to strengthen. Savers will naturally look to jurisdictions where the rules are clearer and more stable.”
Already, wealth managers are reporting conversations shifting from “what if” to “what next”. The fact that people are taking steps before any policy has even been announced shows how fragile trust has become in the stability of UK pension rules.
Reeves must balance fiscal necessity with political optics. Pensions offer a substantial revenue stream, but the Labour leadership is wary of reviving memories of past “raids”. Industry voices are urging restraint:
• Think tanks such as the Institute for Fiscal Studies argue that while pension tax relief is costly — worth £50bn a year — it underpins retirement saving and should not be undermined by short-term fixes.
• Business groups warn that further uncertainty could accelerate capital flight and deter inward investment, compounding the UK’s growth problem.
• Expats and financial advisers stress that any move would disproportionately affect internationally mobile professionals who already feel targeted by rising surcharges on property and restrictions on non-dom status.
With the Budget set for November 26, advisers are cautioning against waiting until Reeves makes her move. Cross-border pension transfers require time to process, and delaying until after any announcement could shut off options.
“Planning ahead is critical,” Green said. “Waiting until after the Budget could mean missing the opportunity to make compliant, efficient transfers before new measures take effect.”
For now, no changes have been confirmed. But with fiscal pressures mounting, history suggesting pensions are a perennial target, and expats already voting with their feet, the fear of a raid may prove almost as damaging as the policy itself.
