Published by Andy Leggett on
The Chancellor, Philip Hammond, has allowed himself more fiscal latitude and ourselves more notice of future changes. It is to be hoped that this signals an end to pensions being the ‘get out of jail free’ card for fiscal problems, played without notice.
When it came to the detail on pensions, the autumn statement was a quiet one for a change – something we are grateful for.
When it came to the detail on pensions, the autumn statement was a quiet one for a change – something we are grateful for. The pension-related headlines had a reassuring ring of non-event about them, although we would caution that one measure in particular could prove significant when it comes to taking benefits.
The triple-lock on the state pension (increasing it by the higher of inflation, earnings or 2.5%) is safe until 2020 at which point it will be reviewed.
Salary sacrifice schemes have grown in terms of the options available in recent years but, from April 2017, these will be restricted in their scope. However, pensions (and pension advice) will be exempt from the crackdown.
Foreign pensions will be taxed as UK pensions, a measure which will affect very few. If you are one of them, this is an area where specialist advice is needed.
Last but not least, the money purchase annual allowance (MPAA) will be cut from £10,000 to £4,000 with effect from 6 April 2017. The stated intention is to minimise the potential for people to gain tax relief twice over.
The benefit of the MPAA is that it allows people some scope to go on building up pension savings – or, if things go awry, re-build them – after they begin taking benefits. In an age of pension freedoms and people retiring in stages, this is a more significant change than it might appear and only increases the value of financial advice before retirement.