The dust is settling on yet another turbulent political week. Since we last posted we have not only a new prime minister, but also an entirely new cabinet as well. But do these changes suggest a significant alteration for the world of employee benefits provision?
The honest answer is that, as yet, there is little to go on. Yet two factors are certainly worthy of note:
- Theresa May’s opening speech as prime minister was a powerful one. She appeared to indicate a major change in direction by the government, with a particular emphasis on not favouring “the privileged few” at the expense of the many. The wholesale alteration of ministerial personnel may also suggest that a change in tactical direction is now being undertaken by the Conservative party.
- The removal of chancellor George Osborne – and appointment of his successor, Philip Hammond – is also a useful indication as to a potential change of fiscal policy. Perhaps this signals a move from austerity to spending as the government seeks to support the economy through the difficult months and years ahead?
When taken together, these two points may suggest a containment of tax breaks for the wealthy with a redirection to other groupings. The most obvious impact for the world of employee benefits could therefore be the revisiting of the Strengthening the Incentive to Save consultation on pension tax reliefs. It is generally accepted that these tax incentives cost the Treasury around £30bn every year, so a review and possible redistribution of this cost is likely to be high on the new chancellor’s to-do list.
Should this happen it will be interesting to see if any Treasury gains are used to encourage savings for the many (perhaps along similar lines to the Pension ISA), or instead used for other short-term economic spending. This is sure to be a subject we will return to once the direction of travel by the new chancellor is better understood.
In the meantime we would continue to strongly encourage employers to make their workforces aware of the generous tax reliefs available within the current pension savings environment.