Austerity is coming to an end.
So said Theresa May in early October, a claim later repeated by Philip Hammond. ‘Fiscal Phil’ unveiled income tax cuts, duty freezes on beer and fuel, more money for housing, mental health and the armed forces, and a new tax to be levied against the likes of Amazon and Facebook.
But what was said – and not said – about pension planning, saving and retirement?
The key news item of the day revolved around a sense of injustice felt by a number of women, who stand to lose thousands of pounds as their retirement age is pushed back.
The WASPI protests and the banners grabbed the attention of MPs and camera crews alike, but there was nothing newsworthy in Hammond’s speech regarding pensions. In fact, the word ‘pension’ was not uttered once during his address to Commons.
However, if you look beyond the speech at the Budget documents themselves, there are tidbits regarding the prospective future of pensions – good news for some, less so for others.
Firstly, the good news. A ban on cold calling about pensions will likely come into effect in the new year, shutting down one of the most common avenues for pension fraudsters.
The Lifetime Allowance for pension savings – cut by almost 20% two years ago – will rise slightly in line with inflation, and the government are looking into ways to boost the saving habits of self-employed workers, millions of whom are failing to plan for their retirement.
The long-mooted ‘Pensions Dashboards’ – an easy-to-access platform to keep track of your pension pots – is also mentioned in the finer print, with the government committing themselves once again to delivering the project – two and a half years on from its initial announcement in George Osborne’s 2016 Budget.
The major talking point in the run-up to Budget 2018 was pension tax relief, an area that is often the subject of consternation from the incumbent Chancellor. However, PTR earned yet another stay of execution in the Budget – although one change does bring cause for concern for a number of pension savers.
From 2019, the personal allowance – money earned before having to pay tax – will increase by £650, with the figure standing at £12,500 from 2019 onwards. These tax cuts. brought forward a year by Hammond, -could put more money in the pockets of lower earners – but could also affect the tax relief they receive.
Should these be part of a net pay scheme – whereby pension contributions are taken out by the employer after tax – those workers will miss out on relief they could otherwise receive at source.
At the other end of the income scale, no news is relatively good news for higher earners, whose tax relief benefits emerge unscathed from the Autumn Budget – though prominent industry figures continue to suggest it is just a matter of time before this relief is targeted by the Treasury.
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