The national news agenda has been dominated by pension issues this month.
For those that missed it (and there cannot have been many given that this was the lead story in spoken and written media), the Chancellor announced a decision to make no decision on pension tax relief in his 16March 2016 Budget speech.
To say that this was unexpected – and not even on the radar just a few weeks ago – is an understatement. After all the theme of reducing or removing tax reliefs from pension contributions was a key highlight of George Osborne’s Summer Budget speech last year, and the government has since concluded the Strengthening the incentive to save consultation on this very issue.
There have been various reasons advanced by the politicians and their advisers for a lack of action here, but the general consensus of opinion suggests that the inaction is directly linked to political issues around the recently announced EU referendum.
Whatever the reason for this move, it is a welcome one for employers, savers, and the pensions industry. All three groups have been beset with legislation-led change over the last few years, and yet another assault on the structure of pension savings would be both unwise and unwelcome at this juncture.
That said, it would be foolish of any one to believe that fundamental reform of the pension tax relief system will not happen in the near future. We would encourage all parties to think of the weekend headlines as merely a temporary parking of the decision – rather than a full scale reversal from it. This issue will surely resurface post the EU debate – and may even do so with more rapidity and less warning given that a formal consultation has already concluded. So all parties should continue to plan for such changes down the line.
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