Shropshire Business Talk: Pensions changes announced in Budget assessed
Independent financial adviser, Paul Ray, of Significant Advisers in Craven Arms, looks at the pension highlights from the Chancellor’s recent Budget and what it means to pensioners.
In his Spring Budget, the Chancellor, Jeremy Hunt, introduced several pension reforms and initiatives.
Here are the key highlights:
The government has confirmed the abolition of the Lifetime Allowance. Previously, this allowance set a limit of £1.07 million on the amount that could be saved in pensions tax-free. Starting from April 2024, this limit will no longer apply.
There will be new rules that will limit tax-free lump sum payments both in lifetime and on death. There will be no limits on any funds used to provide a taxable pension income.
The government has confirmed that it remains committed to exploring a lifetime provider model for Defined Contribution (DC) pension schemes in the long-term. The government will undertake continued analysis and engagement to ensure that this would improve outcomes for pension savers, and build on the foundations of reforms already underway, including the Value for Money Framework.
Additionally, efforts will be made to encourage greater investment in the UK economy by ensuring that UK pension schemes invest in domestic opportunities. New powers will be granted to The Pensions Regulator and the Financial Conduct Authority (FCA) to assess performance based on overall returns rather than just cost.
The government also said that it remains committed to supporting pensioner incomes by maintaining the triple lock.
The triple lock increases the State Pension each year either by inflation, earnings or 2.5 per cent, whichever is higher.
It looks likely that many pensioners will find themselves being brought back into the world of paying income tax. Maybe this is the cost of maintaining the triple-lock!
For pensions, protection, investments and mortgage advice contact the team at Significant Financial Advisers on 01588 673483.
