It was announced over the weekend that the chancellor has elected not to make any changes to pension tax relief; higher rate taxpayers can breathe a sigh of relief as they were likely to have borne the brunt of the measures.U-turn welcomed
Experts have widely welcomed the news. Former pensions minister Steve Webb, director of policy and external communications at Royal London, said:‘Making major reforms simply to fill a short-term hole in the chancellor’s Budget would have been totally unacceptable,’ ‘After nearly a year of uncertainty what savers need more than anything is a period of stability. The chancellor should now rule out any changes in tax relief at least for the rest of this parliament.’
Huw Evans, director general of the Association of British Insurers (ABI), said that the chancellor’s U-turn was a ‘sensible decision.’‘Although we argued for a savers’ bonus flat-rate reform, the current system works well with auto-enrolment and delivers valuable incentives to save for retirement. We now need a period of stability to ensure confidence can grow and the benefits of auto-enrolment can be realised.’
George Osborne announced a possible radical shake up of pensions tax relief in his Summer Budget in 2015, floating a possible move to an ISA-style system where income would be tax free, but tax relief on contributions would be lost. Other options discussed included a flat-rate of relief that would see higher rate relief cut.
It is unlikely that this is the end of the story, and further pensions and savings legislation cannot be ruled out as change is here to stay.Need for advice
One thing is for sure, the area of retirement planning is becoming more complex, and obtaining good quality expert advice is vital given that the average male retiring at age 65 can be expected to live to age 84 - 19 years is long time to make your savings last.
Lovewell Blake Financial Planning Limited’s advisers are highly experienced in providing retirement advice, not only to those individuals with private pensions but also those in the public sector. Call us today
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