As with every Budget, comprehending the full impact of the latest one has taken a few days… allowing the dust to settle and the small print to be analysed and understood.
So, how did pensions fare? Here are some of the measures which either did… or didn’t… come to pass.
First of all, the big news is what DIDN’T appear: rumours were swirling ahead of the Budget that the Government would change the way tax relief is managed on pensions, possibly grabbing some money back in the process, but this has not come to pass.
This may, however, re-emerge at some future point according to some experts.
Other possible measures which never made the cut include any softening on the Government’s stance towards the pension age for women: despite the WASPI protests in the House, Mr Hammond remained unmoved.
Also immoveable, despite long-running protests, was any step to redress the fact that some ex-pat pensioners have had their State Pension frozen for many years. The Government estimates that this would set them back over £500 million and have refused to budge.
Secondly, for those with deeper pockets than the average saver, the lifetime allowance (the total amount you can save into your pension without being taxed) has increased to £1,055,000 for next year, in line with the Consumer Price Index.
Three: news on the long-awaited Pensions Dashboard which should – if and when it comes to pass – will help savers get a much better forward view of their retirement prospects.
Earlier this year, there were rumours that the Government was going cold on the idea, but documents supporting the Budget show that £5 million has been set aside to fund the project. And it was “who pays bit” that did appear to be the sticking point.
The Government now seems to have found some money down the back of the sofa to move this idea forward. Further, the “Red Book” confirms that the Department for Work and Pensions) will consult later this year on a detailed design.
Four: the even-longer awaited ban on cold calling. Campaigners have been calling for several years now to stop unscrupulous operators getting their mitts on savers’ hard-earned cash through dubious techniques, and alongside the Budget, the Government released its response to the consultation.
Don’t hold your breath, but it seems like the ban might finally be introduced in the New Year. Kate Smith, head of pensions at Aegon, welcomed the news, adding: “For the ban to be effective, it needs to be accompanied by a public awareness campaign. So we’re pleased to see that the Government will work with partners to make sure people are aware that pension cold-calling will be illegal, once the ban is in place.”
Five, something completely different: the Government is planning to make it easier for your pension scheme to invest in start-ups and innovative high-growth companies. In particular, it wants to make it easier for workplace defined contribution firms to make these kinds of investments.
Steven Cameron, pensions director at Aegon, took this as meaning that: “The Government clearly has its eye on the £1 trillion Defined Contribution pensions market as a source of ‘patient capital’ investment… [which] offers the potential for high returns for those prepared to take a risk with newer, innovating companies and who are prepared to invest for the longer term.”
Not everyone’s cup of tea, but a chance of having a punt on potentially stellar returns if you put your money on the right horse…
And last but not least: a possible boost for the self-employed’s financial future. In its Budget book the Government says that: “This winter, DWP will publish a paper setting out the government’s approach to increasing pension participation and savings persistency among the self-employed.
“This follows the 2017 review of automatic enrolment and will focus on expanding evidence through a programme of targeted interventions and partnerships.”
No doubt more detail will appear in the months to come, and we’ll do our best to put the announcements into perspective.