The Budget document revealed that implementation of any secondary annuity market will not take place until 2017, with various pensions professionals welcoming the time to properly think through the potential for consumer detriment.
Andrew Tully, pensions technical director at Retirement Advantage, said that as the issues are complex it is right to take stock and provide an appropriate timeframe to consult. “We need to ensure consumers are protected from making poor value decisions, given they could lose 30 per cent or more of their potential income because of costs and upfront tax.”
Meanwhile, a taper to the annual allowance for pensions tax relief is set to be introduced for those with total income over £150,000 - something which was met with disappointment from the industry.
Carlton Hood, customer director at Old Mutual Wealth, used the now well-worn piggy bank analogy, stating that the chancellor’s “persistent tinkering” is not helpful for consumer confidence.
“This is contradictory to the impact the government hopes to achieve with its green paper on pensions tax relief. While these interim changes are not due to come into force until April 2016, it is imperative that savers, particularly high earners, continue to contribute as much as they can to their pension, rather than being put off by what they may see as more uncertainty in the pensions market.”
The big news in terms of housing was a reduction in property tax relief to 20 per cent by April 2020, which mortgage broker SPF Private Clients stated will slow down investment in property, as the tax break has been one of its biggest attractions.
Mark Harris, their chief executive, maintained that arguments in favour of buy-to-let remain. “If you are looking for good long-term growth then that will still be the case and you have a couple of years to get used to the changes, which makes them less painful,” he said, adding that “the UK remains a pretty reasonable tax jurisdiction in which to live”.
The Council of Mortgage Lenders also weighted in, with director general Paul Smee saying that the four-year phased reduction of higher rate tax relief on buy-to-let mortgage interest payments is important.
“We will need to understand whether this will have a behavioural impact on higher-rate buy-to-let landlords, but a four-year timetable does at least reduce the risk of sudden market shocks.”