For a number of years now, barely a Budget has gone by without an announcement that has resulted in further changes impacting the provision of workplace pensions.
It was unsurprising, therefore, that in the lead up to the first ever Autumn Budget on Wednesday 23 November, there was much speculation about what this might mean for the pensions industry, with reform of pensions tax relief predicted by a number of industry professionals.
In the event, however, it turned out to be an uneventful Budget for pensions, with an increase in the lifetime allowance from £1m to £1.03 in line with the consumer prices index, the only real pensions-related change announced by Chancellor Philip Hammond.
This was met with mixed reactions from the pensions industry. For many, it represented a chance to breathe a sigh of relief after so many years of action.
For example, Alan Morahan, managing director, defined contribution (DC) consulting at workplace savings and pensions business Punter Southall Aspire, said, “While the Chancellor’s budget speech was littered with quips, it was light on pension-related content. Many in the pension industry will raise a smile to that. Pensions legislation has been constantly tinkered with, so a period of stability has to be welcomed. The increase in the personal allowance and higher-rate [tax] threshold may have implications for auto-enrolment contributions but we await the results of the [auto-enrolment] review, which might drive what happens next in the continued roll out of this pension revolution.”
Rachel Vahey, product technical manager at Nucleus, echoed his views: “The Autumn 2017 Budget was almost unprecedented for being quiet on pensions. We often call for a quiet budget for pensions, and it looks like this time the Chancellor was listening to our wishes, with none of the rumoured announcements on pensions tax relief or annual allowances surfacing.”
The hope that this marks the start of a longer period of calm for the pensions industry was also expressed. Malcom McLean, senior consultant at Barnett Waddingham, said: “In recent years, pensions have been subject to a number of major changes and the industry can perhaps now look forward to a period of consolidation and respite for the next 12 months. This does not mean of course that the government is not able to spring surprises on the industry for at least the next year. As there is now only to be one Budget per year it seems possible that this period of stability might continue.”
For some, however, disappointment, rather than relief, was the over-riding reaction to this Budget. Robert Branagh, president of The Pensions Management Institute, said: “It is disappointing that the Chancellor missed an opportunity to improve standards of pension provision in [this] Budget. Concerns about pension tax relief and rebalancing intergenerational unfairness have failed to materialise despite the government’s aim to help younger voters.
“The opportunity to encourage more savings in the workplace has also been missed and we are now even more concerned that the government is not interested in pensions and long-term savings over the remainder of this Parliament, as it is focused on other issues. The gap left by this Budget means the pensions industry will need to step up and work with the government to ensure that we continue to foster a much-needed savings culture within the UK.”
So, was the Autumn Budget a much-needed reprieve from the pace of pensions change or a missed opportunity in furthering pensions saving in the UK?