30 October 2024

Mark Stopard, Head of Proposition Development, ZEDRA, comments: “Overall the Budget has been much more quiet on the pensions front than we perhaps expected, and we feel a sense of relief that some of those pre-budget rumours and ideas being floated have not been taken forward. There seems to have been no big hits, just unfortunately none of the money that is needed to make sure more than a small minority receive an adequate pension has been put into the system.

Some top line observations:

• We welcome no national insurance on Employer’s pensions contributions – this would have been very disruptive. Equally, no changes to tax relief on contributions, allowances or ‘tax free cash’.
• There has been no detail on the application of IHT to pension pots, so we’ll just have to wait and see on this one. The comment ‘going back to the situation pre the 2015 pension reforms’ hints it might just be left over drawdown pots that will potentially be subject to IHT. If so, this will have limited impact on pension provision and instead restrict tax planning options for wealthier individuals. If it applies to all pension (and group life?) death benefits, then this becomes a major administrative issue – the devil will be in the detail on this one!
• On pension adequacy it is a continuation of the current pattern where more pressing government priorities are putting this on the back burner. Whilst, for example, if they had put National insurance on Employer pension contributions, this would have put adequacy into reverse, taxing employers to fund public spending in other areas is pushing the pensions adequacy agenda further down the line and it is less likely that Auto-enrolment extension, or AE contribution increases will come in any time soon.

The chancellor has decided that as a nation we should spend the limited cash we have on the NHS, public services and potholes rather than pensions. Necessary in the short term, but worrying for our future stand of living in the longer term.”

 

-ENDS-