Pre-budget preparation for the pensions fraternity is ordinarily a stressful affair. Whispers of anticipated budget changes often morph into shameless gossip columns, resulting in the pensions industry adopting the brace position for impact.
I’m wary of speculation. After all, in the financial sense at least, speculation contributed significantly towards the great depression of 1929. So, have predictions been proven correct?
In recent history pensions commentators’ have often been accurate in their budget hypotheses of pension mayhem. However, this year, the budget demonstrated a controlled approach, rather than a crash landing. Pensions were, relatively, left untouched. But don’t be fooled, such laissez-faire approach could be deliberate given recent pensions turbulence.
Employers have enough on their plate. If not done so already, organisations with a DB scheme, open or closed, should respond to the DB Green Paper by the 14th of May (11:45pm to be exact) – this is the single biggest opportunity to help shape the future of final salary provision. Please, no moaning about DB deficits if you don’t feedback. This is important.
In April, we will see the Lifetime ISA (LISA) take off (if you can find a provider) – will you be offering employees this alternative retirement savings vehicle? Tax free withdrawals could make LISA particularly attractive to junior staff who foresee significant career development, and subsequent tax increases. You can read more about my thoughts on LISA in a previous blog.
The budget wasn’t completely pension free, though. The annual allowance will reduce from £4,000 to £10,000 for those who have accessed their pension savings in some shape or form. With traditional retirement waning, more people are working longer, but less. As such, some of your employees are likely part-time, and drawing their pension to supplement income – how has this reduction landed with your employees?
Mr Hammond also announced that those wishing to transfer their pension(s) outside the EU will be hit with a 25% exit tax. This measure is effective immediately, and is expected to line Government pockets with c. £315 by 2020-21. Exceptions apply, though. Namely the tax will not apply to those who live where the pension is being transferred, or if the QROPS (Qualified Recognised Overseas Pensions Scheme) is provided by the individual’s employer. Do you have staff with aspirations of moving abroad?
Thankfully and, somewhat unusually, the 2017 budget was quiet for the world of pensions. This isn’t the time for autopilot, however – what a rare opportunity for organisations to get their house in order, and take stock of pension obligations.
Don't be lax - make sure you get your employees’ to the retirement destination they’re expecting, and not pensions obscurity.
Gareth Hopkins is Director at GJH Pensions. To keep up to date with all the latest GJH Pensions news you can subscribe to our newsletter here or follow us via twitter @GJHPensions. GJH Pensions are an independent consultancy offering practical solutions to all things pensions. Our industry expertise, and personal approach, means we can truly understand the bespoke requirements for each client. Contact GJH Pensions today for a free consultation on 07446 148 537 or email firstname.lastname@example.org.