The Chancellor of the Exchequer, Philip Hammond, has today delivered this year’s Budget Report. Please see our summary below.
The government is taking steps to support the launch of Pensions Dashboards, innovative tools that will for the first time allow an individual to see their pension pots, including their State Pension, in one place. The Budget confirms that the DWP will consult later this year on the detailed design for Pensions Dashboards, and on how an industry-led approach could harness innovation while protecting consumers. DWP will work closely with the pensions industry and financial technology firms. The Budget provides extra funding in 2019-20 to help make this a reality.
Jonathan Watts-Lay, Director, WEALTH at work, comments: “Anything which helps individuals to understand what pension savings they have is a good thing but it should be viewed with caution, as it could have many limitations.
For example, it’s important for individuals to think holistically when planning their retirement income as it’s no longer just about pensions but all types of savings such ISAs, share schemes and other savings and investments. As the dashboard will only consider pensions, there are clear gaps.
Also, unless the government regulates this to ensure all pension providers are forced to take part many members may find that the dashboard doesn’t include their provider.”
Lifetime allowance for pensions
The lifetime allowance for pension savings will increase in line with CPI for 2019-20, rising to £1,055,000.
Watts-Lay comments; “Reaching the LTA could be closer than many employees think. For example, they may have a number of pension schemes that when combined with their current pension provision, could exceed the allowance.
Many workplaces now offer support to their employees in terms of financial education, guidance and advice. This approach helps employees understand the implications of breaching the LTA and how this could be mitigated by, for example, taking cash in lieu of employer pension contributions which may then be invested in other tax efficient vehicles such as an ISA.”
Banning pensions cold calling
To help protect people from fraudsters, the government is publishing a response to its consultation alongside the Budget and will shortly be implementing legislation to make pensions cold calling illegal.
Watts-Lay comments: “It’s time to send a clear message to pension scammers that this will not be tolerated, so the sooner this ban is implemented the better. However once the ban is in place, employees will still need to be alert as it’s not going to stop all fraudsters including those who are calling from overseas.
Those who are approaching retirement are an attractive target as they have access to potentially large amounts of money which is why we are urging employers to help employees understand the dangers by raising awareness of this issue.”