When he stood up to deliver his Budget at the start of the week, the Chancellor of the Exchequer Philip Hammond said ending a decade of austerity “is about leaving more of people’s hard earned money in their pockets” – a goal that is only achievable through a tax system that "remains fair and robust against abuse".
Despite widespread expectation of a cut to the annual allowance, this year’s Budget did not mention cuts to pensions tax relief, nor did pensions feature in the Chancellor’s Budget speech on October 29.
However, the lifetime allowance for pensions is set to increase by £25,000 to £1.055m in 2019 to 2020.
While the government's decision not to cut back pension tax reliefs has been welcomed by many, others eager to plan for their contribution to social care costs will be frustrated that the promised Green Paper is still in the works, Steven Cameron, pensions director at Aegon, points out.
So what major changes did the Budget 2018 deliver – and what was left out – on pensions and social care?
Local authorities will get an extra £650m of funding towards social care in the coming year, while the Green Paper on the issue is due to be published soon.
Mr Hammond has pledged to put social care on a fairer and more sustainable footing, with short-term funding of £240m in 2018 to 2019, £240m for adult social care in 2019 to 2020, and an additional £410m for adult and children’s social care in 2019 to 2020.
Mr Cameron says, while the commitment to provide additional funding will “offer some relief to councils struggling with ever-increasing demands”, it is “little more than a temporary sticking plaster measure”.
He says: “We urgently need concrete, long-term proposals in the promised Green Paper on how to tackle the huge issue of funding social care costs.
“While implementing a new approach may need to wait until after Brexit is done and dusted, the Government can’t afford to keep pushing important policy discussions into the long grass.”
Following rumours the government was considering scrapping the pension dashboard, in September it revealed it would let the industry take the lead on the project.
But buried in the Budget documents is a promise to allocate £5m in 2019 to 2020 to see the delivery of the pension dashboard, which will include state pensions. The Department for Work and Pensions (DWP) will launch a consultation on the pension dashboard later this year.
Scott Finnie, product architect at Hymans Robertson, suggests the government should direct its energy and finances towards establishing the data standards necessary for the dashboard concept to flourish.
He says: “By doing so, it will facilitate innovation in the consumer applications available and those innovative applications are the visible face of the dashboard; the data standards are the foundation.
“By focusing on the data standards, the government will equip and encourage industry to deliver better retirement outcomes for UK consumers.”
The pensions industry has been campaigning for a pensions cold calling ban for some time and, finally, the government revealed it will be implementing legislation to make pensions cold calling illegal in the Autumn. The ban will be enforced by the Information Commissioner’s Office (ICO).