He continues: “While an element of capital investment may be worth considering in some schemes, we’re pleased to see the government recognise this must be part of a diversified approach.
"The key aim of pension schemes must remain providing an income in retirement to their members, not as a compulsory flow of investments to finance parts of our economy.”
Will Fraser-Allen, deputy managing partner of Albion Capital, believes it is a “landmark move”.
“An appropriate allocation of pension scheme assets will enable young companies that achieve initial scale with early-stage venture capital support, such as VCTs (venture capital trusts), to access the funds they need to develop through their next stages of growth,” he explains. “Pension schemes are a natural source of funding for scale-up businesses.”
Pensions tax relief
Pension tax relief was not the target of cuts in the Budget, despite rumours that it would help fund the government’s plans to provide an extra £20.5bn of funding for the NHS in 2023 to 2024.
Since 2010, there have been six separate cuts to the annual and lifetime allowance.
According to Steve Webb, director of policy at Royal London: “The Chancellor’s windfall from better-than-expected borrowing forecasts meant that he did not have to cut back pension tax relief in this Budget.
“But having described the system as ‘eye-wateringly expensive’ it is likely to be only a matter of time before this Chancellor – or his successor – comes back for more. Respite for pension tax relief is likely to be only temporary.”
Net-pay pensions tax relief anomaly
Finally, those hoping to see the government address the net-pay pensions tax relief anomaly – the issue of low paid workers missing out on tax relief when they are enrolled in a net pay arrangement scheme – will be sorely disappointed.
Adrian Boulding, director of policy at Now Pensions, notes: “It’s extremely disappointing that the Chancellor has chosen to continue to ignore the 1.2 million low earners in ‘net pay’ schemes who are missing out on tax relief on their pension contributions through no fault of their own.
“The government must act urgently to end this injustice, ensuring that all low earners receive tax relief regardless of which type of scheme they are in.”