Rachel Reeves spreads 'havoc' among pensioners who did right thing and played by the rules

Not for the first time, pensioners are at the heart of it. After her disastrous winter fuel payment blunder, it's clear many in Labour still think retirees have it too easy and should lose some of their hard-won benefits and tax breaks.

Rachel Reeves was forced into retreat over that policy, but she's found new ways to target older people. Her last Budget hit pension savers hard, by slapping inheritance tax on unused funds in defined contribution schemes subject from 2027.

Now she's coming back for more in her next Budget on November 26. Nobody can say for sure what's coming, but the rumours aren't good. She refuses to deny any of it, letting anxiety fester.

Reeves squeezed the public for £40billion last year and is preparing another £30billion tax hit this time. Talk has focused on inheritance tax reforms and tighter gifting rules, but the biggest concern centres on pensions.

Reeves has three possible lines of attack, and all would cost savers dear.

One option is to cap the tax relief people get when paying into pensions. Higher earners currently get relief at 40% or 45%, while basic rate taxpayers get 20%.

Reeves could switch that to a flat rate of 30% for everyone, delighting Labour's class warriors. It would save around £3billion a year, according to Oxford Economics.

The change would be politically appealing but technically tricky, which may deter her.

Anyone worried can take simple action by paying more into their pension to claim higher rate of tax relief today. Just remember that funds inside a pension can't be touched until age 55, rising to 57 in 2028.

The Chancellor's second option is to cut the annual allowance, which currently lets savers pay up to 100% of their income into a pension, capped at £60,000 a year.

Slashing that to £40,000, where it stood until recently, would raise a modest £300million. It would only hit higher earners, making it more tempting.

Again, anyone worried can beat the raid by maxing out this year's pensions annual allowance, and using carry back rules to mop up the previous three years too. This is a good idea at any time.

Reeves's third potential pensions raid is far more dangerous. Financial advisers say it is already causing panic.

That's because it targets the most popular pension benefit of all: the ability to take 25% of your total pot free of tax.

Oxford Economics says Reeves could save £2billion by cutting the limit from £268,275 to £110,000.

Speculation surrounding this has triggered chaos. Tomm Adams, a partner at accountants Blick Rothenberg, said the lack of clarity over the Budget is "leading to erratic behaviours" among pension savers.

Many are taking their 25% tax-free cash early, terrified Reeves will cap it. But Adams fears they will make mistakes that could leave them worse off for life.

It's best to leave money to roll up tax-free in a pension for as long as possible. But many are withdrawing it too early, with investment platforms reporting a surge in withdrawals.

Attacking tax-free cash would be totally unfair. Reeves will face fury from millions who saved for decades on the promise that this benefit was part of the deal.

It would also punish pensioners who did what successive governments asked them to do, and save for retirement to ease the burden on the state.

I'll repeat. We don't know what Reeves will do. So please avoid making panicky withdrawals.

But there's no easy answer. Because if Reeves does act, many will be furious and wish they had taken their tax-free cash. And I can't help with the decision, because I don't know. Nobody does. Probably not even Reeves yet.

Personally, I don't think she'll touch our tax-free cash but I'm guessing. No wonder there's havoc out there.

I understand why Reeves doesn't want to knock down every pre-Budget rumour, but she could make an exception here, given the high stakes. But for now, she refuses to come clean, leaving pensioners facing an impossible decision.