Pension mentions a-plenty in Chancellor’s growth-focused Budget

Ffion White

by , PR Manager

06 Mar 2024 /  

06
Mar 2024

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PensionBee responds to pensions-related announcements in the Chancellor’s Budget speech;

On the National Insurance cut impact on pensions: more disposable income for workers (but not pensioners)

Becky O’Connor, Director of Public Affairs of PensionBee, commented: “Putting more money in workers’ back pockets on the back of a prolonged cost of living crisis is clearly a vote-winning move but will also make a genuine, pretty much instant difference to individual household budgets, creating space to save or spend.

“It could enable people who had previously put long-term savings on hold to once again begin to set money aside for the future.

“However it conspicuously doesn’t benefit pensioners, who do not pay National Insurance. They would have benefited more from either an increase in the personal tax allowance, as state pension increases continue to drag more over this threshold, or a cut to income tax, which they pay on pension income.”

On Mansion House reforms:

Giving The Pensions Regulator and the Financial Conduct Authority new powers to define value according to overall returns, not costs, as well as new vehicles for pension investors and new requirements for defined contribution funds to disclose the proportion of funds invested in the UK.

Becky O’Connor, Director of Public Affairs of PensionBee, commented: “A lot of what the Chancellor announced here is work that is already in motion, with the exception of the public disclosure of asset allocations, to make it clear how much of pension savers’ money is invested in the UK.

“The focus on value for money rather than the costs of pension investments is welcome. It’s also important that pension savers understand what counts as value for money in the investment world.

“Rules to disclose the proportion of funds invested in the UK versus elsewhere, as well as performance information, are a good idea. More transparency in general over where pension savers’ money is invested is welcome. Savers would also benefit from having a better understanding of how and where their retirement funds are invested.

“However the Chancellor needs to beware the unintended consequences of disclosing past performance alongside information on how much a pension fund invests in the UK. It may unfortunately show poorer performance of domestic investments - not exactly the incentive to invest in the UK the Government might hope to provide”.

On a British ISA and an NS&I British Savings Bond:

Becky O’Connor, Director of Public Affairs of PensionBee, commented: “Adding £5,000 to the traditional ISA allowance for a British-focused ISA and creating a British Savings Bond is exactly the kind of incentive that will work to allow people the choice to invest more in Britain.”

On continued work on ‘Pot for Life’ solution to multiple pension pots:

Becky O’Connor, Director of Public Affairs of PensionBee, commented: “The Government sees clear potential in the idea of people having a lifetime pension provider so that they don’t lose old, valuable pension pots as they go from employer to employer.

“This concept could be popular and relatively easy to introduce, ultimately improving retirement outcomes and allowing people to take full control of their long-term finances. Our research found that 75% of the general public would consider adopting a pot for life if it was introduced.”

Reform of Child Benefit and the High Income Child Benefit Charge

Becky O’Connor, Director of Public Affairs of PensionBee, commented: “This stupidly complicated system has had repercussions for parents’ state pension entitlements. The system is a mess for many reasons, not just because of the unintended consequence that thousands of people were put at risk of poorer retirement outcomes, so it is very satisfying to see this finally being addressed.”

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