Following the Budget and the Chancellor’s ‘decision’ not to simplify the pension tax regime, we have been left with the current system where individuals, employers and the pensions industry are struggling to get to grips with the enormous complexity of the tapered annual allowance.

The industry is also struggling to get to grips with the previously announced reduced Lifetime Allowance of £1 million, a sum that sounds enormous but which is beginning to impact not just the very well paid but doctors, senior nurses, teachers and swathes of middle management.

ACA research in 2015 found many schemes are losing members due to the complexity of the pension tax regime and concerns over personal tax implications. Therefore we welcome the increase from £150 to £500 in the allowance for pension advice funded by employers.

The pensions industry can breathe a sigh of relief that it has not been hit by the enormous complexity of a move to flat-rate taxation or a Pensions ISA but it will be interesting to see how long a Chancellor can or will leave the current level of incentives untouched.

Whilst we support an initiative that looks to boost flexible savings for those aged under 40, it is difficult to see how this will sit alongside other pension saving schemes and products. We wonder whether this initiative will undermine auto-enrolment and lead to more young people opting-out in favour of a more flexible savings product. The government may need to consider whether AE contributions should be allowed into Lifetime ISAs.

- ACA chairman David Fairs

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