Pension announcements expected in 11 March Budget

Chancellor Sajid Javid has announced that the next Budget will take place on 11 March 2020, with pension announcements relating to the Conservative Party election manifesto expected.

Javid said that the Budget will set out plans to “unleash Britain's potential” and “open a new chapter for the economy”.

According to the government, Javid is expected to deliver on the government's promises on tax, which may include reform of pension taxation, including the annual allowance taper affected public service schemes.

Javid stated: “People across the country have told us that they want change. We’ve listened and will now deliver.”

Hargreaves Lansdown head of policy, Tom McPhail said that there was a “possibility” that the government will announce “a more radical review of pension taxation”.

“The UK’s pension tax relief system is no longer fit for purpose,” he stated.

“The recent election result, giving the new Conservative government a clear mandate, presents an opportunity to confront the bloated inefficiencies of the UK’s retirement savings, addressing not just the immediate problems of the tapered annual allowance and the net pay issue for lower earners, but reforming the entire system for the 21st century.”

Other industry experts have also predicted that Javid could use the Budget as an opportunity to address the net pay issue, which is causing savers in the wrong type of schemes to lose out on certain aspects of tax relief.

AJ Bell senior analyst, Tom Selby, added: “The Conservatives have promised a ‘comprehensive review’ to fix the problem, although it is by no means certain a solution will be found in the next three months.”

He said, however, that the taper is “perhaps the more pressing problem”.

Selby continued: “If a radical overhaul of tax relief is in the offing, it is important this is carried out sensibly and doesn’t risk the fragile savings culture currently being fostered in the UK.

“Ripping up the roots of our savings system without first understanding how this might affect the propensity of people to save for retirement would be a huge risk and could undermine the good work so far done under automatic enrolment.”

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