Claire Carey comments on the Chancellor’s Autumn statement

Claire Carey, partner, comments:

“Making clear that he will not take risks with inflation, today the Chancellor outlined 110 measures to help grow the economy. Following an avalanche of pensions reforms proposed in the wake of the Chancellor’s Mansion House speech in July, it was no great surprise that pensions featured heavily amongst the package of 110.

Key themes include greater consolidation, with the Chancellor promising to consult “this winter” on opening up the Pension Protection Fund to act as a consolidator for smaller DB schemes “unattractive to commercial providers”, presumably coupled with suitable safeguards for levy payers given its current function as a pensions lifeboat. He also expects to see a DC market “in which the vast majority of savers belong to schemes of £30 billion or larger by 2030”.

Given the Government’s stated goal of helping to finance high growth businesses, another winter consultation is in the pipeline on possible changes to rules around when DB scheme surpluses can be repaid to employers, and whether this could incentivise investment in assets with higher returns. The rate at which a surplus repayment is currently taxed will also be reduced from 35% to 25% from 6 April 2024.

Further reforms to tackle the growing number of people with deferred small DC pension pots were also announced. With the Government already exploring what can be done to tackle the existing problem, it now seems keen to consult on preventative measures. If they ultimately get the green light, DC pensions savers will be able to maintain a single pensions pot for life.

Many of the proposals announced today have been on the cards for some time, but the Chancellor seems to be aiming to pack a lot into the time available before the next General Election.”