‘No news is good news’ - pensions industry

The industry has reacted to today’s Budget announcements with relief at pensions largely being left untouched, tinged with disappointment at the lost opportunity to address pensions tax relief and intergenerational fairness.

“No news is good news for pension investors,” Hargreaves Lansdown head of policy Tom McPhail said. “The stability of no change is a welcome relief after years of political interference and the salami-slicing of reliefs and allowances.”

AJ Bell senior analyst Tom Selby agreed, describing the lack of pensions changes as “a welcome respite for UK savers”.

“The pension freedoms are still less than three years old and a period of stability to allow them to bed in is an unusually pragmatic decision from a Chancellor who could easily have taken the axe to pension incentives to curb the increasing cost of tax relief to the Exchequer,” he added.

Barnett Waddingham senior consultant Malcolm McLean echoed this relief.

"This was very much a steady as you go Budget, with no major surprises – in fact there were no new pension related changes whatsoever in the chancellors’ address to the House. Hammond has tried to address the issue of intergenerational unfairness through other means than pensions this Budget – changes to stamp duty for first time buyers and the extension of eligibility for young persons discounted rail card,” he said.

Prudential retirement expert Les Cameron expressed hope that the lack of pensions tinkering is a sign of things to come and will help to increase consumer understanding of, and confidence in, pension planning.

However, according to Quantum Advisory partner and actuary Stuart Price, “although we can breathe a sigh of relief now, given the suggested economic benefits of revising the current tax relief system for pensions, I’d say we can’t rule out changes in the not too distant future”.

Some in the industry hope these changes come sooner rather than later. As Ashurst pensions lawyer Jordon Gordon said: "Some will feel that the Chancellor has made little effort to address the issues that currently dominate the pensions industry, of which tax and inter-generational fairness are perhaps the most pressing."

PMI president Robert Branagh expressed disappointment at the “missed opportunity” to improve standards of pension provision in today’s Budget.

“Concerns about pension tax relief and rebalancing intergenerational unfairness have failed to materialise despite the government’s aim to help younger voters,” he said.

“The opportunity to encourage more savings in the workplace has also been missed and we are now even more concerned that the government is not interested in pensions and long-term savings over the remainder of this Parliament, as it is focused on other issues. The gap left by this Budget means the pensions industry will need to step up and work with the government to ensure that we continue to foster a much-needed savings culture within the UK.”

Sharing Branagh’s disappointment, The People’s Pension director of policy Darren Philp said: “With an ageing population and 14 million Brits unlikely to have enough to live on in retirement, the Chancellor’s lack of action to support long-term savers is incredibly disappointing.

“Year on year ahead of the Budget there is constant speculation about reform of pensions tax relief, a system that is now on borrowed time, yet we continue to see no action. The current system is unfair for lower earners and so unclear that most people are not aware of the benefit. A flat rate system, set at between 25-30% and presented as a simple bonus or top-up, would have made a firm statement in support of auto-enrolment and helped more people to save for the future.”

Philp also noted that with the auto-enrolment review approaching,” the Chancellor missed the perfect opportunity to outline the government’s intent, and show its commitment to the seven million people who are currently excluded from the scheme.”

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