Were today's pensions announcements a missed opportunity?
23 November 2016
The retention of salary sacrifice for pension contributions is a welcome support to retirement saving. However, with no announcements on the tax relief taper or boosting LISAs, today was a missed opportunity to simplify the labyrinthine rules around tax relief on pension contributions and clarify the overall direction for encouraging long-term saving.
The only exception was the reduction of the Money Purchase Annual Allowance from £10K to £4K which, while designed to prevent tax relief recycling, was arguably a step backwards for pension flexibility for those drawing their pensions while still working.
The Chancellor focused on infrastructure spending with the emphasis on government investment. Infrastructure is also of significant interest to pension funds as an area for longer term investment with attractive returns. However, there has been a general lack of supply of suitable projects and it has often been only the larger pension schemes that have been able to access these opportunities due to their bespoke nature.
Hopefully the renewed focus will stimulate more opportunities for pension plans to invest alongside government in future. The retention of the triple-lock increase on the State Pension will continue to fuel debate about its suitability and the impact on intergenerational fairness.
The Chancellor's confirmation of the ban on pension cold calling and scams is good news, but the challenge will be in policing it.
For individual pensioners, the announcement of a £3,000 three year bond with an attractive interest rate is some good news in their hunt for retirement income.