The Chancellor’s Autumn budget addressed a number of key issues that are currently affecting the UK public, however economy growth was slashed dramatically from the predicted 2% earlier this year to 1.5%, while productivity is also expected to be lower due to slow wage growth and lacklustre investment.
This is the forecast for the next three years, which will ultimately impact the financial security of millions of people. Financial stress costs the economy £121 billion a year and people with debt worries are twice as likely to develop major depression which can lead to lost productivity and absenteeism.
However, utilisation of the policies that have been put in place such as the increase of personal allowance to £11, 850 from April 2018 and the increase of the lifetime allowance for pension savings, there is hope for financial reprieve.
Employers need to make the decision to play an active role in getting employees engaged with their savings and there are a number of initiatives they can implement.
Jonathan Watts-Lay, Director, WEALTH at work, a leading provider of financial education, guidance and advice in the workplace, comments;
“As expected it was confirmed that the lifetime allowance for pension savings will increase in line with CPI, rising to £1,030,000 for 2018-19.
It’s important that employees understand the LTA rules and take a view of their situation so that it doesn’t come as a nasty surprise.
Many employers now offer a cash alternative to remaining in the pension scheme but unlike a pension contribution, the increase in pay is subject to income tax and national insurance.
Alternatively, employees could look at diverting contributions into another type of tax efficient savings vehicle, an ISA for example which is remaining unchanged at a limit of £20,000.
Many employees now look at their workplace to offer a variety of workplace savings schemes alongside pensions. It’s good to see that many employers are now starting to adapt their reward and remuneration packages for employees, to offer them more flexible and tax-efficient solutions for saving.”
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