Jason Whyte, Director in EY’s Insurance practice, comments on the state pension announcement in the Autumn Statement: “The Chancellor’s announced rate of £155.65 for the new flat-rate state pension is not a huge surprise. For someone working full time today, it’s roughly 60% of the Living Wage. So for the lowest earners, the step down in income at retirement will not be too bad by international standards, but for most people it will probably leave a sizeable gap to what they would call a comfortable retirement income. And, it will be some time before auto-enrolment savings are big enough to plug that gap.”
|
And in the absence of further change to private pensions, Jason comments: “In private pensions, no news is sort-of good news for the Life & Pensions industry. For the first time in this Parliament, Osborne has not announced radical change to the private pensions system, giving the Treasury more time to digest the Green Paper consultation from the summer’s emergency Budget.
“Meanwhile, the industry is still dealing with the consequences of earlier interventions. The new Pensions Freedoms continue to reshape the retirement industry, and the implementation of the tax relief taper next April is likely to create a lot of volatility in pension premium income as high-earners with variable pay try to guess what their annual limit will be by the end of the tax year. Asset managers may benefit from money that might have gone into pensions going into ISAs – a foreshadowing of what might happen when the Treasury reports back on the Green Paper?”
|
