Election sees two more pension measures dropped

Election sees two more pension measures dropped

The government has dropped plans to give a tax break to employers on pension advice, as well as a ban on cold calling people about their pensions.

The government announced at last year's March Budget that it would increase the income tax and National Insurance exemption for employer-arranged advice on pensions from £150 to £500, and remove a cliff edge that meant that if an employer spent more than £150 on advice, the whole amount became taxable.

However in a bid to rush through the Finance Bill which contained the plans ahead of the General Election, the government has abandoned the proposal.

Similarly the government has also dropped for now its proposed ban on pensions cold calling, first brought into the spotlight by Darren Cooke of Red Circle Financial Planning who launched a parliamentary petition last September on on the subject.

Tom McPhail, head of policy, Hargreaves Lansdown, said: “The government is rushing through the legislation wash-up, prioritising key policy measures and jettisoning anything which could slow-up the process." 

He described the moves a "disappointing", particularly as these are "not contentious measures".

"Investors are reaching retirement every day and are missing out on the benefits of these interventions. We hope to see these measures reinstated the other side of the election, if the Tories win.”

The government has also backed off from reducing the money purchase annual allowance (MPAA) and cutting the dividend allowance. 

The measure to reduce the MPAA from £10,000 to £4,000, announced in the Budget and due to be confirmed in clause 12 of the Finance Bill, has been dropped, according to a note on the parliament website.

The MPAA is the amount a person who has already begun drawing on their pension can pay in one year back into their retirement savings without a tax charge applying.

The cut in the dividend allowance from the current £5,000 to £2,000 from the new tax year in April 2018, has also been dropped.