Pensions tax reform was saved from the “pain of tinkering”, despite missed opportunities to fix the net pay anomaly and simplify pensions allowances, the industry has said.
Commenting on the Budget, delivered yesterday, 29 October 2018, Quilter pensions expert Ian Browne said the lack of pensions news was a “welcome relief” for savers given the “alarming rate” which rumours of pension tax were circling this year.
Experts had warned that Hammond could make cuts to the lifetime or annual allowances, as a way to find extra funding for the NHS. However, in background documents published following the Chancellor’s Budget, the Treasury revealed the lifetime allowance is set to increase in 2019/20.
Sackers partner Lucy Dunbar believes the budget should be seen as a good news story for pensions for its “welcome stability”.
“The budget should be seen as a “good news” story for pensions, with the headline message of no significant changes to pensions tax relief or tax allowances giving welcome stability,” Dunbar said.
My Pensions Expert executive chairman Andrew Megson agreed, and said it was a case of “no news is good news” for pension savers.
Commenting on the announcements, Aegon pensions director Steven Cameron said there was “nothing to spook savers and investors” in the Budget.
“Today’s pre-Brexit Budget failed to deliver up anything new for savers and investors. For some, the Chancellor’s decision not to cut back pension tax reliefs will be welcome.
“It’s good to see those who speculated that Hammond would cut pension tax relief proved wrong. Unfortunately, Chancellors can see pensions and their associated tax breaks as a short-term cost rather than a long-term benefit,” Cameron added.
Despite this, many were left disappointed about the lack of pensions detail in the Budget, particularly on the net pay arrangement, causing people to miss out on valuable tax relief.
Barnett Waddingham senior consultant, Malcolm McLean, said: “There was a disappointing lack of detail about future plans for pensions in this year’s Budget announcement, with many areas only outlined for consultation and discussion over the next 12 months.
“Mr Hammond failed to follow up on his earlier statement that ‘pensions tax relief is eye-wateringly expensive’, which may mean he will wish to come back on this at a subsequent budget. However, for now there appears to be no change in either the rate of tax relief or the allowances.
McClean added that many of the proposals laid out by Chancellor Philip Hammond could make their way into the pensions bill promised by Pensions Minister Guy Opperman at this year’s annual Pensions and Lifetime Savings Association conference.