Aviva’s chief executive Dame Amanda Blanc has personally asked Chancellor John Healey to stop floating potential policy changes before the October budget.
She warned that pension savers could be harmed by weeks of speculation about possible tax raids on their retirement savings.
Dame Amanda revealed she raised the issue directly with Mr Healey at a recent event. She told him the Government must avoid repeating last year’s mistakes, when rumours swirled about cuts to the 25 per cent tax-free pension lump sum.
“We do not want to see new things every week in the press around what might happen in the run-up to the budget,” she said.
“That is not very helpful, because what we do not want is for customers to make decisions that they will regret in the long run when policies are not changed.”
The Chancellor reportedly promised her in person that he would not pre-brief on possible policy shifts ahead of the Budget on October 28.
The speculation ahead of last autumn’s budget caused real damage to pension savers. Aviva saw a “significant” volume of money pulled out of pensions as customers panicked about losing their tax-free entitlement.
Former chancellor Rachel Reeves ultimately left the rules untouched at the fiscal event. The withdrawals turned out to be completely unnecessary.
“Customers would have been better to wait and see what the Government was going to do,” Dame Amanda said.
“Once you’ve made the decision to take your tax-free lump sum, you cannot reverse the decision.”
She backed calls from across the insurance industry for the Government to leave the tax-free lump sum alone. “We would definitely concur that it’s something that shouldn’t be touched,” she said.
The Aviva boss argued that ministers should focus on “encouraging people to save into their pension” rather than “double-taxing people”.
The warning came alongside strong half-year results for the insurer. Aviva reported operating profits of £1.33billion for the six months to June 30, a jump of 24 per cent on the same period last year.
The company said its takeover of Direct Line, completed in July last year for £3.7billion, is already paying off. Sales through price comparison websites have grown and the business is becoming more profitable.
“We are making very good progress with the integration of Direct Line,” Dame Amanda said.
“We have quickly improved Direct Line’s profitability, grown price comparison website sales and maintained excellent levels of customer service.”
She added: “We are well on track to deliver all the financial benefits of the acquisition.”
Aviva doubled its cost-saving target from the deal last November after hitting the original £100million goal early. The company now aims to cut £225million in costs by 2028.
Despite the strong operating performance, bottom-line profits told a different story. Interim earnings fell to £418 million from £819million a year earlier.
The drop was caused by losses on hedging against interest rate and equity movements, along with costs tied to the Direct Line restructuring.
The company also trimmed its forecast for the health insurance arm. Aviva now expects that division to deliver £90million in full-year operating profit, down from earlier guidance of around £100million.
The insurer blamed “slowing market growth” among consumers and small businesses.
The Treasury responded to Dame Amanda’s concerns with a brief statement.
A spokesperson said: “The Chancellor is fully focused on his priorities, to boost business, help with the cost of living and support people in every postcode.”
The spokesperson added that the Chancellor would set out decisions at fiscal events rather than commenting on speculation.