Aviva boss in warning to Chancellor ahead of October’s budget

Dame Amanda Blanc said kite flying ahead of John Healey’s maiden budget would not be helpful

The boss of insurer Aviva has urged the new Chancellor not to “fly kites” with prospective policies ahead of the October budget after last year’s speculation around pension changes

Chief executive Dame Amanda Blanc, who was born and brought up in Treherbert, said widespread rumours that the UK Government might cut or restrict the 25% tax-free pension lump sum ahead of the autumn budget in 2025 led to a surge in early withdrawals.

She revealed she made the plea to clamp down on pre-budget policy speculation directly with Chancellor John Healey at a recent event to avoid policyholders making rash decisions with long-term consequences.

Dame Amanda said she wants the government “to not fly kites” ahead of the Budget on October 28.

She said: “We do not want to see new things every week in the press around what might happen in the run-up to the budget.

“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.”

She said the group saw a “significant” amount of money withdrawn from pensions due to the worries over impending tax-free lump sum changes, with former chancellor Rachel Reeves ultimately not altering the rules at least autumn’s fiscal event.

“Customers would have been better to wait and see what the Government was going to do,” said Dame Amanda.

“Once you’ve made the decision to take your tax-free lump sum, you cannot reverse the decision.”

She said Mr Healey had made the commitment in person to her at the recent event not to pre-brief on possible policy changes ahead of the Budget.

She also backed wider industry calls for the Government not to alter the tax-free lump sum allowances.

“We would definitely concur that it’s something that shouldn’t be touched,” she said.

She added the government should be “encouraging people to save into their pension” and not “double-taxing people”.

A Treasury 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.

“As has always been the case, the Chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”

Aviva’s budget plea came as the firm reported better than expected half-year earnings and cheered action to “quickly” improve profitability at Direct Line since buying the firm in a £3.7 billion deal.

The group posted a 24% surge in operating profits to £1.33 billion for the six months to June 30.

It said the firm had already started to turn around the performance at Direct Line following the acquisition in July last year, boosting price comparison website sales.

Dame Amanda said: “We are making very good progress with the integration of Direct Line. We have quickly improved Direct Line’s profitability, grown price comparison website sales and maintained excellent levels of customer service.

“We are well on track to deliver all the financial benefits of the acquisition.”

Aviva revealed in November last year it was doubling aims for cost savings following the Direct Line deal, having met the £100m original cost-saving target ahead of plan.

The FTSE 100 firm now expects to strip out £225m in costs by 2028 following the deal, though it said at the time this was not set to involve further job cuts, with Aviva having already signalled last December that up to 2,300 jobs could go under the cost-cutting plans.

The results showed on a bottom line basis, interim profits nearly halved to £418m from £819m a year earlier due to a hit from hedging for interest rate and equity exposures, as well as Direct Line integration and restructuring costs.

Aviva also lowered the outlook for its health division, saying it now expects the division to deliver full-year operating profit of £90 million compared with its previous guidance for around £100m.

This is due to “slowing market growth” in consumer and small business markets, according to Aviva.