AJ Bell says Budget jitters are causing investors to pull pension money

AJ Bell has warned uncertainty around Rachel Reeves’s Budget this month is causing investors to pull pension money from its platform and hold off contributing to their retirement pots.

In a trading update for its financial year to September, the FTSE 250 firm said it had seen an acceleration of cash exiting the platform amid speculation the Chancellor will use her budget to hike the charge paid on pension withdrawals.

“We continue to advance discussions around the creation of a supportive legislative environment for long-term investing through simplification of the ISA system and long-term pension tax stability,” said chief executive Michael Summersgill.

“Amidst increased press coverage ahead of the upcoming Budget, we have seen a noticeable change in both customer contributions to pensions and tax-free cash withdrawals.

“We have therefore made representations to the Treasury calling for a commitment to a pension tax lock in the Budget, guaranteeing stability in key pension tax legislation for at least this parliament.”

It marks the latest in a string of warnings from AJ Bell over the potentially punitive effects of Rachel Reeves’ fiscal measures. Last week, Summersgill warned rumours around the budget were damaging investors’ confidence and choking off the flow of cash into the market.

The alarm bells come after investors deposited £6.1bn into AJ Bell over year to September as customers at the investment platform swelled 14 per cent.

While the results were broadly in line with market expectations, some analysts said AJ Bell had failed to impress given recent bumper numbers delivered by some of its peers.

“Given the outperformance delivered by both Quilter and IntegraFin during the quarter, we believe that AJ Bell’s in-line performance may be seen as a slight negative,” said Investec analysts Rahim Karim and Jens Ehrenberg.

Yesterday, AJ Bell competitor Quilter reported £1.4bn in new money over the last three months, bringing its stock price up by five per cent throughout the day.

Inflows into the company jumped by a 45 per cent from last year, bringing total platform assets under management to £86.5bn, above Investec expectations of £85.8bn.

Shares in the company dipped 2.4 per cent this morning. AJ Bell has bagged a rise in its share price of around 54 per cent since the start of the year.