There was no widespread shake-up of pensions tax relief in the Autumn Budget.
There had been rumours that chancellor Philip Hammond may look to introduce a flat-rate of tax relief, but in the end there were only more minor changes to the pensions landscape.
However, leading pension experts claimed that it may only be a matter of time before such changes were introduced.
Royal London’s director of policy – and a former pensions minister Steve Webb says: “ ‘The chancellor’s windfall from better-than-expected borrowing forecasts meant that he did not have to cut back pension tax relief in this Budget.
“But having described the system as ‘eye-wateringly expensive’ it is likely to be only a matter of time before this Chancellor – or his successor – comes back for more. Today’s respite for pension tax relief is likely to be only temporary’.
Elsewhere many pensions experts pointed out that raising the personal allowance to £12,5000 in April 2019 – a year ahead of the Conservative manifesto pledge – will further exacerbate the problem of low pay workers not receiving tax relief on pension contributions.
Aegon’s pensions director Steven Cameron says that while this move would be welcomed by low-earners, there was a “sting in the tail” for those contributing to workplace pension schemes.
“Those who are contributing to a workplace pension should check they are receiving the tax boost they’re entitled to from the Government.
“Some schemes use a ‘net pay’ approach which don’t claim the Government’s tax relief top-up for non-tax payers.
“The industry has called on the Government to address this anomaly which penalises low earners, and the earlier increase in personal tax allowance makes this even more urgent as more people will be affected.”
Now Pensions director of policy Adrian Boulding adds: “It’s extremely disappointing that the chancellor has chosen to continue to ignore the 1.2 million low earners in ‘net pay’ schemes who are missing out on tax relief on their pension contributions through no fault of their own.”
He adds: “This isn’t just a quirk of the tax system but something that affects working people’s living standards. The government must act urgently to end this injustice ensuring that all low earners receive tax relief regardless of which type of scheme they are in.”
Elsewhere, in the accompanying Budget papers it was revealed that the Department of Work and Pensions would be allocating £5m to the development of the pensions dashboard in 2019/20.
The industry is currently waiting for a feasibility study on the implementation of this initiative. This was initially expected this autumn, although delays mean it is not now expected until next year.
The industry welcomed the announcement of this funding, as there is widespread support for this dashboard initiative, which would include details of all workplace, personal and state pensions.