Government U-turn leaves room for further pensions change
Claire Carey, partner at Sackers, comments:
“The news emerging over the weekend that the Government will not be pressing ahead with radical pensions tax changes as part of the forthcoming Budget has no doubt been greeted with a collective sigh of relief. With pension schemes and their advisers still grappling with the onslaught of developments over the last few years, a major shake-up could have proven unwelcome. But with pensions tax relief still forming a major part of Treasury spend, there are no guarantees that there won’t be further tinkering with the system in the future.
“A promise not to change the current system of tax relief, at least for now, leaves the Government with plenty of options to modify the current regime. A week after a Government review of the state pension age suggested employees may be working into their 80s, could an accelerated rise of the retirement age now be on the cards?
“Higher earners, who were likely to be most impacted by the Government’s plans to reform tax relief, have not escaped from plans to restrict pension benefits. They will now be focused on significant reductions in the lifetime and annual pension savings allowances, which come into effect in April and, while unlikely, could see further adjustment. We will be analysing the Budget closely for further changes to pensions legislation, which the past has taught us cannot be ruled out.”