As the speculation mounts, what is in store for pensions in tomorrow's Autumn Statement?
“Wouldn’t it be nice if there was no change?” said Steve Webb, director of policy and external communications at Royal London, and former pensions minister at last week’s Engaged Investor Professional Trustee Summit.
Well yes it would but that’s unlikely. It will be Chancellor Phillip Hammond’s first major announcement in his new role, so he will be keen to show his credentials during what I think is fair to say is a particularly tumultuous time for our nation.
Although further largescale changes to the pensions sector aren’t expected, there are likely to be a few tweaks.
And despite wishing for an easy ride this time around, Webb was realistic, highlighting some areas where he anticipated Hammond may well focus his attention if he wants to claw back some money.
Lifetime Allowance and Annual Allowance
Will Hammond finally listen to the pensions industry and scrap the lifetime allowance? There has been much call for it, as the repeated reductions plus the taper introduced last spring have just created confusion and complexity in the market. Absurd behaviour when we need to be encouraging saving for retirement.
However, many believe that Hammond won’t be doing any such thing, not without also reducing tax relief contributions.
Although former Chancellor George Osborne scrapped plans for a major overhaul of tax reliefs in his March Budget, this might be back on the table now that Hammond is in charge.
Those on higher salaries benefit far more from the government top up than those on lower salaries, and with Prime Minister Theresa May also championing a fairer society, Hammond could be rethinking the current tax relief regime.
Most in the industry expect Hammond will start off slowly, and save any radical upheaval to the pensions industry until the Spring Budget.
Let’s hope he leaves us alone, for now at least.
This article first appeared on Pensions Insight