Several industry experts and financial advisers were pleased that pensions were left unchanged by chancellor Phillip Hammond in today’s (22 November) Budget.
Rachel Vahey, product technical manager at Nucleus, told FTAdviser that “it is almost unprecedented” to have such a quiet Autumn Budget.
She said: “We have often called for a Budget that doesn't tinker with pensions savings levels and this one seems to be an answer to our prayers.
“The only change is in the lifetime allowance, which is something that was already expected, since it had already been promised."
We have often called for a Budget that doesn't tinker with pensions savings levels and this one seems to be an answer to our prayers.Rachel VaheyThe lifetime allowance represents the maximum amount of money a saver can invest in their pension pot - and benefit from tax relief at their marginal rate - before incurring an additional tax charge of up to 55 per cent.
The lifetime allowance will still increase by £30,000 from April 2018 to £1.03m, a move announced in the 2015 Budget and from 2018 to 2019 the allowance will be increased by inflation measured using the consumer prices index.
Ms Vahey said: “This is a good news Budget for us. It gives savers security to continue doing what they are, gives a solid background to advisers to continue to work with their clients.”
Steven Cameron, pensions director at Aegon, also agreed that this Budget might just be what the pensions industry needed.
He said: “With Brexit fast approaching, and uncertainty and complexity growing, those who are saving need the confidence to keep doing it.
“On the other hand, the lack of mentions of pension tax relief is unusual for the Budget, but equally very welcomed.
“Any radical change would be very complex at a time where the focus needs to be on Brexit.”
But for Steve Webb, former pensions minister and now head of policy at Royal London, the chancellor should have gone further and announced there would be no changes to pension tax relief during this parliament.
He said: “The Treasury looked at changes this year. They will look at it again next year.
“Stability doesn't mean just not changing things, it means telling us that it is not going to change.”
According to Nathan Long, senior pensions specialist at Hargreaves Lansdown, “it turns out that boring is great”.
He said: “The industry will welcome a pause after the near endless tinkering to pensions over the past few years.
“It has been a long time since pension providers have been able to get by without adding additional caveats to their communications.
“Higher rate tax payers should make hay while the sun shines. We don’t expect the current tax relief regime to last forever."
Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, said that the absence of news “was absolutely welcomed and is refreshing for a change”.
He said: “If the government wants to get people saving for retirement with pensions then they need to promote a period of stability and trust.
“They cannot do this if they keep moving the goal posts every other year.”
For Alistair Cunningham, financial planning director at Surrey-based Wingate Financial Planning, the number of changes in the Budget that will affect his clients will be minimal.
However a combination of historic tinkering and scare stories in certain media outlets does not engender a feeling of security, he concluded.
maria.espadinha@ft.com
