'Tax, Isas and advice: my predictions for the Autumn Statement'

Looking backwards, there’s the spring Budget announcements, plus the extensive set of proposals announced around July’s Mansion House speech.

Ahead, of course, is a looming general election with the spring Budget likely to be the last opportunity for big announcements to wow voters.

Tax, inflation and state pensions

After last year’s "mini"-Budget debacle, there’s a strong need to demonstrably reflect the latest government borrowing and economic outlook figures from the Office for Budget Responsibility. Tax revenues, the cost of government borrowing and progress towards inflation targets will all feature strongly.

The big question is, will there be any movement on taxes?

Income tax rate cuts would be most eye-catching, but unfreezing thresholds could potentially be more beneficial for lower earners.

Other possibilities are reductions in inheritance tax rates or more relief for businesses. But if you were the chancellor, wouldn’t you prefer to keep these up your sleeve for your pre-election spring Budget?

The state of the nation’s finances will also have a bearing on the state pension triple lock decision for next April.

Will the government honour this in full, granting an 8.5 per cent increase, or might they take the risk of alienating state pensioners by massaging this down to say 7.8 per cent, arguing that NHS bonuses distorted this year’s figures?

The Mansion House compact

I fully expect the chancellor to include next steps around encouraging defined contribution pension schemes to invest more in private equity.

Some providers, including Aegon UK, have already signed up to the Mansion House compact, committing to invest 5 per cent of workplace default funds in private equity by 2030, provided that’s in members’ interests.

I expect an update on the proposed value for money framework for DC pensions, which will shift the focus from charges to improving value for members, including through seeking out new investment opportunities such as private equity.

We may also hear more on the extension of collective defined contribution pensions, which are likely to invest with a longer time horizon, again making private asset investments more likely.

The key [with Isas] is to be realistic about what can be delivered by April without unintended consequences.

The Mansion House pack also included extending pension freedoms to members of trust-based schemes as well as plans to deal with numerous small deferred pension pots.

The Department for Work and Pensions' own assessment shows that some of these initiatives have a much bigger impact on member outcomes than others, with separate reforms to extend auto-enrolment far more beneficial to members.

Similarly, some are more likely than others to encourage private equity investment. I do hope this is reflected in a prioritised approach, with the extension of AE number one, rather than risking a chaotic attempt to implement all at once.

Reforming Isas

The rumour mill is in overdrive over possible Isa reforms.

If the chancellor does announce changes here, I expect they’ll focus on encouraging greater investment – perhaps specifically in the UK.

One suggestion is a move to merge cash and stocks and shares Isa, which, while presented as a simplification, is likely to be far from simple or quick to implement.

Another is to increase the annual investment limit, possibly only into stocks and shares, or more controversially into UK stocks and shares.

Allowing more than one Isa per year is also rumoured to be under consideration. To me, the key here is to be realistic about what can be delivered by April without unintended consequences.

We could also see changes to Lifetime Isa rules such as raising the age restrictions, the annual investment limit or the maximum eligible house price.

But I see removing the ‘exit penalty’ to be against the underlying principle of paying an upfront bonus to encourage investing for house purchase or retirement purposes.

The advice/guidance boundary

I’m hopeful the Autumn Statement will also prompt the publication of a joint HM Treasury/Financial Conduct Authority consultation to take forward the holistic review of the advice/guidance boundary.

The FCA has listed aims here as supporting consumers to invest cash, avoiding scams or inappropriate high-risk investments and supporting pension scheme members, including around adequacy of contributions.

These could in various ways support the chancellor’s growth agenda. Ultimately, I hope this will result in a more personalised form of regulated guidance.

Unfinished business

The industry warmly welcomed the surprise announcement in the March Budget of the removal of the pensions lifetime allowance.

While the LTA charge has already been replaced by tax at an individual’s highest marginal rate, the allowance itself is due to be removed from legislation next April.

This is proving fiendishly complex for HMRC, with final rules including new lump sum limits and treatment of some death benefits still to be determined.

I would be delighted if the chancellor took the opportunity to extend the interim arrangements for a year, and while legislating pre-election, make the effective date April 2025.

This would allow all parties – HMRC, providers, schemes, advisers and individuals – to move forward in an orderly manner without unintended consequences.

Steven Cameron is pensions director at Aegon UK