Commenting on the Spring Statement, Steven Cameron Pensions Director at Aegon said:“While we weren’t expecting any ‘major’ policy announcements in a Spring Statement overshadowed by Brexit, it’s disappointing there was so little indication of what might be on the Government’s post-Brexit priority list.”
Social care
“Social care funding did receive a solitary mention but only to say it will be considered as part of a comprehensive summer spending review, suggesting the long overdue Green Paper is further delayed. The Government urgently needs to put the future funding of social care on a sustainable footing. Our ageing population deserves clarity on what the state will pay for and what individuals will have to fund themselves, based on their wealth. An increased commitment to Government funding, given equal priority with the NHS, would be very welcome. We also need a cap on the overall amount anyone will have to pay themselves, allowing people to plan ahead and protect inheritance aspirations. This is a major issue which will make a huge difference to the futures of millions of individuals across the age spectrum long after Brexit.”
Low earners and the ‘net pay’ pension issue
“The Chancellor’s commitment to focus on raising wages for the low paid is welcome. One immediate way of doing so would be to instruct HMRC to ensure non-taxpayers in ‘net pay’ schemes receive the 20% tax relief on their pension contributions to which they are entitled. Solving this issue would mean someone earning £11,500 and paying the automatic enrolment minimum contribution from April 2019 would be £53 a year better off. For low earners, every little helps.”
Future savings incentives
“It’s good news that the Office of Budget Responsibility reports a further improvement in the UK’s financial position since the October Budget, provided a no deal Brexit can be avoided. We hope this paves the way not only to boost public services and reduce taxes but also importantly to improve incentives to save and invest.”
No excuse for Autumn raid on pension tax relief now Chancellor has revealed his ‘war chest’ – Steve Webb, Royal London
The improvement in the public finances revealed by the Chancellor in his Spring Statement means he now has no excuse for an Autumn Budget raid on pension tax relief, according to Royal London policy director Steve Webb.
In the Spring Statement, the Chancellor said that public borrowing in each year from 2020/21 was expected to be £5-£6 billion a year lower than previously forecast. But there were no giveaways in the Statement and how this extra fiscal headroom will be allocated will depend in part on the outcome of a full spending review due to be started later this year.
Last Autumn the Chancellor said that the cost of pension tax relief was ‘eye-wateringly expensive, and hinted that more cuts were likely, over and above the six separate cuts to lifetime and annual limits since 2010. But now that there is less pressure on the public finances than previously thought, there would be no justification in going ahead with such cuts.
Steve Webb, Director of Policy at Royal London said:‘Too often, governments have raided pension tax relief for extra revenue to meet a short term spending crisis. Now that the public finances are improving faster than expected, there is no justification for further ‘salami slicing’ of limits on tax relief. Pensions should be a long-term business, not subject to annual tweaking by cash-strapped Chancellors. An improving fiscal picture means the Chancellor should refrain from any further short-term cuts’.
Commenting on today’s Spring Statement, Gregg McClymont, director of policy for The People’s Pension, said: “While we could have all predicted that today’s statement would be overshadowed by Brexit, long-term thinking is crucial in pensions policy. It’s disappointing that the government didn’t take this opportunity to offer a good news story by undertaking to extend auto-enrolment to the thousands of workers not currently covered by the scheme.
“It’s vital that the government delivers on its promise to lower the age limit for auto-enrolment from 22 to 18, calculate contributions from the first pound earned, and go beyond its existing promises to bring in half a million new savers - the vast majority women often combining part time work with caring - by lowering the £10,000 earnings trigger to the primary national insurance threshold.”
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