As Budgets go, it was a quiet day for pensions, which many will welcome as they continue to struggle with the array of challenges already before them. However, hidden in the detail, the Treasury revealed that it had taken in much more tax as a result of pension freedoms than anticipated - over £1bn more than originally forecast. This suggests that pension savers who have valued the flexibility have also contributed to the Treasury's coffers, hopefully delivering a win-win result. This could encourage other savers to take this option and increase the number of pension schemes facilitating it.
"For those looking to transfer their pension to a qualifying scheme abroad (QROPS), a 25% tax charge is introduced from midnight tonight unless a need for the transfer can be demonstrated, as an anti-avoidance measure. This could in effect be an ‘exit tax’ for those who want to leave the UK and take their pension with them.
"Lifetime ISAs will come in from April as expected along with the higher ISA limits, but no further steps were announced to help harmonise pensions and ISA tax reliefs to better integrate and encourage long-term savings. The Chancellor may be keeping his powder dry until the Autumn Budget.
"The £3,000 NS&I bond paying 2.2% interest will be welcomed by pensioners just about managing on their savings, but amounts to just £66 a year in practice.
"With the Green Paper on Defined Benefits schemes currently out for consultation, there was little in the OBR’s economic forecast to suggest pressure on these schemes will reduce in the foreseeable future. Action flowing from the Green Paper will be key for any relief, although the lack of parliamentary time for this could delay it significantly.
"The announcement of increased support for seeding private sector infrastructure investments such as local broadband projects may be attractive to pension scheme investors looking for long term returns to meet pension liabilities.
"Another Green Paper, on Social Care, is promised and this may interact with pensions, for example by allowing access to pensions to fund long-term care needs."
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