Industry members have placed pensions high up on the wishlist for the chancellor Jeremey Hunt in his Autumn Statement next week.
After unexpectedly not being addressed in the King’s Speech on November 7, some have made predictions of what we can expect to see from the chancellor.
David Brooks, head of policy at Broadstone, said pension scheme investment in productive finance, the abolition of the Lifetime Allowance, and tax-breaks for ISAs could all be on the cards.
On his wishlist was for for more people to be brought into the auto-enrolment evolution to be included in the statement.
“The policy aim of auto-enrolment was to help the low- and median-income workers," he said.
“Pension saving may possibly not be right for them but to exclude so many seems an arbitrary way to determine if a pension, with employer contribution, is the right choice.”
Similar predictions were made by Isio head of research and development, Iain McLellan, who also said he expects the Lifetime Allowance to be fully removed.
“Maybe we’ll see the tax charge applied when surpluses are returned from defined benefit schemes to their sponsors reduced," he said.
“Given that the corporation tax rate stands at 25 per cent, there’s scope to make tax on surpluses a little less onerous.”
McLellan added that two other areas where new legislation is needed is “a formal regulatory system for superfunds and the broadening out of collective defined contribution schemes to cover decumulation only and multi-employer schemes”.
Additionally, Hymans Robertson partner, Kathryn Fleming, stated: “We’d like to see the government propose putting clear actions in place to ‘solve the decumulation puzzle’ facing both DC scheme members and trustees.
“It should encourage the industry to think innovatively to offer support for scheme members at the point of retirement.”
She advised that the “key channel” to achieve this would be through establishing a “broad alignment” amongst what is offered by different providers, compelling them to provide decumulation solutions for their members through all pension schemes.
The first step in this, according to Fleming, will be a requirement from the government for all DC trust-based schemes to support members in accessing the full range of pensions freedoms.
Mortgages
Meanwhile, Coventry Building Society head of intermediary relationships, Jonathan Stinton, called for more support for first time buyers in the statement.
He commented: “If the property market is going to remain stable it needs to stand on firm foundations - a fundamental element of that is a functioning first time buyer market.”
Stinton explained that every new buyer who steps onto the property ladder will give it added “strength and stability” and, without them, the ladder would be “top heavy and volatile”.
To address this, Stinton advised that the Chancellor shouldn’t neglect to help those looking to step onto the ladder, and that the aim should be building long term stability.
“Previous incentives have all had an end date and certain caveats, and it’s questionable how helpful they’ve been in the long term - what we really need is something which gives certainty and is heater up to be an integral part of the market,” he explained.
“Helping first time buyers with their home should mean helping first time buyers with any home - buyers shouldn’t be restricted to certain property types to get support.
“It’s up to the chancellor to decide what that support looks like, but let’s hope he’s learned from past mistakes and delivers something the whole of the property market can stand firm on.”
Meanwhile, HW Fisher tax partner, Tim Walford-Fitzgerald, indicated he would like to see some support for the rental sector: “What we would like to see is some more longer term plans in order to help the rental sector.”
However, he acknowledged that with the election coming next year, it will be difficult for the government to make any long term commitments.
Explaining recent issues with the sector, Walford-Fitzgerald said recent changes have meant that landlords are dropping out of the market and a lot of that, but not all, is driven by the tax changes over the recent years coupled with increases in interest rates.
To address this, he indicated he would like to see an end to the mortgage interest relief restriction brought in by George Osborne.
"With the increases in interest rates, that has been rather punitive, and, for more heavily geared landlords, the tax rates can be in excess of the profits they are making in real terms," he said.
Tax
Taxation was another topic under consideration with Aegon pensions director, Steven Cameron, suggesting that rumoured improved fiscal headroom and the achievement of the Government’s inflation target will raise hopes of immediate tax cuts.
However, Cameron additionally stated that he would expect the chancellor to “hold back” on these until his Spring Budget next year.
“While a cut in rates would be the most eye-catching, lower earners could actually benefit more from thresholds being unfrozen,” he explained.
“Any cuts in taxes are likely to be limited to those which won’t risk recreating inflationary pressure, for example extending business reliefs.”
tom.dunstan@ft.com
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