30th October 2018 What the Budget means for pensions
In the days leading up to the budget, the press was certain that chancellor Philip Hammond was going to put in place more legislation relating to “defined ambition”, a Liberal Democrat policy that became law in 2015 but still hasn’t been brought into force.
Heavy hints were dropped that the Treasury thought more law was needed and that this was going to be announced.
The press which was not running with the defined ambition proposal said that there would be some legislation to manage defined benefit so-called “superfunds”. These superfunds act as consolidators for defined benefit pensions for employers who can no longer run them, but can’t afford to buy them out with an insurer.
As well as that, there was a widespread belief that we would hear more about all the proposals to deal with pension liberation scams, many of which appear to have been kicked into the long grass last year.
In the end, Hammond mentioned pensions precisely zero times. No big fanfare, no new laws and, it appears, precious little interest. The documentation does make some mentions of pensions, such as the need to put more funds aside for public sector pension schemes (many of which are not pre-funded) and the provision of funds for the pensions dashboards, a technology project that has been some years in the making, which intends to allow an individual’s pensions to all be seen in one place.
The lack of interest in pensions fits with a general lack of focus on personal savings. ISAs, the big rival to pensions for personal savings, saw no increase to their saving limits and pension lifetime limits (the lifetime allowance) rose with inflation, to £1,055,000. This is not, it would seem, a budget for the encouragement of savings.
However, there are a few interesting points from a pensions point of view. In addition to the dashboard (which was rumoured to have been abandoned earlier this year, earning much political criticism for the DWP and its minister), the promise of a Department of Work and Pensions paper in the “winter” on how to provide pensions for the self employed could be very interesting. The current proposals include a form of optional automatic deduction via tax payments to encourage this group, which has lamentably low savings to have some old age provision.
Perhaps pensions are being allowed to continue without any further changes to tax relief. However, unlike many other areas of law, those in the pensions field have been promised another Pensions Bill in 2019, so perhaps Hammond is simply taking pity on the industry, temporarily.
Rosalind Connor, Partner
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