How to manage savings gap speculation ahead of the Budget

With the Autumn Budget just around the corner, employers need to be prepared if previous years’ levels of speculation start, says Cushon’s Steve Watson.

We don’t know what the new Chancellor, John Healey, will announce on 28 October, but that won’t stop the rumour mill. And although it’s been quiet so far, I suspect there will be speculation well before the Chancellor stands up.

At Cushon, our approach is not to add to the speculation, but to help savers navigate it and provide clear, reliable information so they can make informed decisions about their pensions.

Experience tell us that once the speculation starts, employees will hear it too and that is where employers have an important role to play. The decisions that do most damage to retirement savings are often made in the weeks before anything is announced.

I recently presented the overall findings from the latest REBA and Cushon research at the REBA Pensions Summit. One of the strongest concerns to emerge was the savings gap or, in government terminology, pension adequacy. Or, given the scale of the challenge, perhaps pensions inadequacy is more accurate.

More than two-fifths (42%) of employers are very concerned that contribution levels aren't adequate and that their employees aren't building up appropriate levels of retirement funding.

But most employers aren’t in a position to absorb any more costs and so the majority, 70%, are looking to help employees to make good financial decisions and encourage them to save more for retirement.

With that in mind, the last thing anyone wants is for employees to make short-term decisions about their pensions because they've heard some idle speculation and are worried about what might happen.

Why speculation is dangerous and undermines adequacy

Most employees won't know the detail of pension tax rules, allowances or the different ways in which changes announced in a Budget might affect them. But there is one part of pensions that many people do understand – tax-free cash.

For employees, the prospect of being able to take some of their pension as a tax-free lump sum is tangible. They can understand it and put a value on it. And so, if speculation starts that tax-free cash could change, employees may not hear a nuanced discussion about pension policy, they may simply hear: I could lose my tax-free cash.

And that can be enough to prompt someone to think about taking money out of their pension sooner than they otherwise would. If that happens, the challenge of pensions adequacy becomes even worse.

This isn't just a high-earner issue either. Everyone hears the same headlines. Not everyone has the knowledge or inclination to work out whether a potential change would actually affect them.

That's why employers need to think about this before the speculation begins.

5 things employers can do in the run-up to the Budget

You can’t control Budget speculation, but you can control how prepared you are to help your employees navigate it.

Talk to your pension provider: Find out what support they will provide in the run-up to the Budget and how quickly they can respond on Budget day if there are announcements affecting pensions.
Prepare your employee communications: Agree in advance how you will communicate with employees if there are rumours and/or significant developments on the day.
Keep the message simple: Don’t respond to pension speculation with more pension jargon. Employees will want to know three things: Does this affect me? What does it mean? Do I need to do anything? Work with your provider to make the answers as clear and accessible as possible.
Give employees somewhere trusted to go: Make sure employees know where they can get reliable information if they see something in the media or hear a rumour from a colleague. The aim isn't to tell them what decision to make, but to help them make decisions based on facts rather than speculation.
Keep pension adequacy at the heart of the conversation: Don't let the Budget become a short-term distraction from the long-term issue. Use the REBA/Cushon research to consider whether your pension strategy is helping employees build adequate retirement savings and whether your communications are helping them understand why that matters.

Download REBA's Future of Pensions Research 2026 and Cushon's The Employer Guide to Pension Consolidation.