Please defer pension changes in the Autumn Statement

We believe one of the most important incentives for long-term retirement savings is consistency.

When governments keep changing the rules, people are discouraged from using pensions as a long-term savings vehicle to secure the income they need in later life.

One of the changes to pension rules we already know about is the introduction of a tapered annual allowance for higher earners.

This is due to come into force on 6th April 2016.

It will restrict pensions tax relief by introducing a tapered reduction in the amount of the annual allowance for individuals with income (including the value of any pension contributions) of over £150,000 and who have an income (excluding pension contributions) in excess of £110,000.

The Autumn Statement next week could represent an opportunity for the Chancellor to postpone introducing this change.

Commenting ahead of the Autumn Statement, Richard Parkin, Head of Retirement at Fidelity International said:

“We would urge the Chancellor to give employers a break in next week’s Autumn Statement and postpone the introduction of a tapered annual allowance set to be implemented from April 2016.

“This policy doesn’t just impact city fat cats but also hard working business people and professional public servants such as GPs and surgeons.

“These rules are complex and have introduced significant uncertainty and additional costs not only for the individuals affected but also their employers and pension plan trustees.

“The Chancellor has flagged that he will be announcing further changes to incentives in the 2016 Budget – expect these to impact high earners, to be relatively radical in nature and to be effective within a relatively short time frame – perhaps as early as April 2017.

“It therefore seems unreasonable to expect employers and pension plan trustees to introduce and operate special arrangements for high earners that will almost certainly be changed within 12 months and probably won’t generate significant savings for government in that time.

“It is for this reason we call on the Government to defer these changes in the Autumn Statement and present a clear direction for overall reform of the system of tax-incentives in the next Budget.”

What would you like to see in the Autumn Statement next week on the subject of pensions?