Pensions come out of Autumn Budget largely unscathed
This year’s Autumn Budget saw pensions and savings, somewhat surprisingly, left essentially untouched by the Chancellor.
Philip Hammond refrained from looking to pensions to raise revenue in the 2017 Autumn Budget, which was characterised by a ‘loud silence’ in regard to this sector.
As I was quoted as saying in the Daily Express and International Investment, amongst others, the only significant change in this Budget was the lifetime allowance for pensions to increase in line with the CPI, rising to £1,030,000 for 2018/2019.
In addition, after several years of hikes, the ISA allowance for 2018/19 is being frozen at £20,000, whereas the yearly subscription limit for Junior ISAs and Child Trust Funds for the 2018/19 tax year will rise in line with the CPI to £4,260.
Indeed, the Chancellor has made a remarkably positive move with this Budget in leaving pensions alone, rather than delving into them to raise cash.
What makes this decision particularly extraordinary is that Mr Hammond requires an additional £8 billion for expenditure the government has already committed to. Therefore, his abstention from raiding pensions comes as a very welcome surprise.
For many years now, the government has looked in the direction of people’s retirement funds, funds they are working or have worked all their lives for, as a straightforward means of raising revenue.
This has been considered standard practice in the past as, to put it bluntly, the government can get away with it. Of course, there is a large quantity of money within pensions, the majority of which belongs to the higher net worth individuals within society, who get tax relief.
As such, the Chancellor’s move to avoid tinkering with pensions to raise cash is certainly a step forward, showing that the Treasury understands that this money is an individual’s most important ‘possession’, and not something for the government to target to boost their coffers.
Indeed, not going near pensions in this Autumn Budget is hopefully the beginning of a new approach by the government. This is incredibly positive for both savers and the industry, as using pensions to resolve an immediate or short-term issue is imprudent and highly counterproductive.