Contrary to speculation, there were few pension and investment measures in this Budget. And many of those aspects which are included don’t have any specific changes now, but rather will be the subject of future consultation.
The pension lifetime allowance is edging back up again to £1,055,000 — slightly higher than indicated by September’s inflation figure — although obviously still well below its high of £1.8m only a few years ago. Alongside that, April 2019 will also see the personal allowance rise to £12,500 and the higher rate threshold to £50,000.
Although as these thresholds are then frozen in 2020/21, the increases are perhaps not as generous as they first appear. For taxpayers with an income of £125,000 or above in either year, their personal allowance will be tapered to zero so they won’t benefit.
In more positive news, the government is eventually pushing ahead with a cold calling ban. A massively increasing number of pension scams is one of the unintended consequences of the pension freedoms. The government confirms it will lay the regulations this autumn so hopefully the new restrictions will be in force by early next year at the latest.
Any ban will only cover calls from the UK so there is still the possibility people will receive calls from overseas around their pension. A key factor in the success of the ban will be raising consumer awareness that pensions cold calling is illegal, and they should simply put down the phone if someone they don’t know calls about their pension.
Elsewhere, the government has committed £5m more funding to further consider the pension dashboard. The dashboard is due to be launched in April 2019 but this appears highly unlikely. Key decisions have not been made around coverage, inclusion of state benefits and how it is accessed, and the government appears in two minds around its commitment to the project.
One thing seems clear. For the dashboard to work effectively there needs to be compulsion on all schemes and providers to provide data, including the government for state pensions and public sector schemes. Building a sub-standard version which only contains some information means it is likely to become a white elephant, with running costs out of all proportion to its usefulness.
The government will publish a paper this winter considering ways of increasing pension participation and savings persistency among the self-employed. There are about 4.8 million self-employed and it is estimated around half of those people have no pension provision. So this is a key area where we need new thinking, but there appear few simple answers with the automatic enrolment revolution largely passing by the self-employed.
The government has also signalled a forthcoming consultation on the taxation of trusts but with no further detail we will need to wait and see what that covers.
All in all, a fairly dull Budget in the world of savings and retirement. But the ongoing debate around the future of pension tax relief will no doubt continue to swirl around and may gain prominence as and when Brexit is dealt with and a government (of whatever colour) has a workable majority.
Andrew Tully is pensions technical director at Canada Life