Budget pension shocks means 'admin headache' for IFAs

Budget pension shocks means 'admin headache' for IFAs

Chancellor Jeremy Hunt has given advisers an 'admin headache' by pulling a few pension surprises out of his hat in the 2023 Budget, according to this week's FTAdviser podcast guests.

This week’s Budget came with a few surprises, especially around pensions.

In recent years the Budget has not contained too many shockers or changes for pensions but this week (March 15) chancellor Jeremy Hunt announced that the lifetime allowance would be abolished - something that even the pensions world did not see coming. 

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Other announcements included changes to the annual allowance and, importantly, an uplift to the money purchase annual allowance. 

Appearing on the FTAdviser podcast, Claire Trott, divisional director for retirement and holistic planning for St James's Place, said in terms of the lifetime allowance, if a client has got enhanced or fixed protection, they will still be able to protect their tax-free cash.

She added: “But after the end of the tax year, the regulations will allow you to rejoin schemes and obviously have no lifetime or charges. So there's going to be a lot of people who have saved a lot of money, who are currently not saving into their pensions, that will restart.

“I think there'll be a lot of advisers going through their books of business and checking which clients have chosen not to do that and are currently bringing money into their estate they don't need to.

“It’s a really great thing to look at with regards to IHT planning and reviewing outcomes. It is going to be a very busy year for pension advisers.”

Tim Morris, IFA with Russell & Co, agreed that advisers were going to have a lot on their plates when dealing with these latest changes.

Morris said: “It is going to impact quite a few clients. There's always some anomalies and with the tax free cash now at this £268,275 figure there are people who need to then take action.

“Yes, that's a bit of a headache, but I have read that 39 per cent of advisers actually voted for scrapping the LTA.

“There will be other people who it's going to benefit and there are some great planning opportunities for clients. It's definitely a headache but it’s a good one to have.”