George Osborne has scrapped proposals to shake up pension tax relief in this month’s Budget.
The Chancellor had been expected to announce further radical changes to pensions in the Budget on March 16.
Peter Gale, Senior Wealth Manager at AAG, comments “The surprise turnaround highlights the political nature of pension changes. While allowing a small amount of breathing space, this is seen as a postponement rather than a permanent scrapping.”
The pension consultation has been looking at how the system works, and it seems that Osborne has recognised that now is not the right time, with uncertainty in the global economy, auto-enrolment still rolling out and individuals still getting to grips with the changes made last year.
There has also been mounting pressure from the government to avoid any upset to its campaign to remain in the EU ahead of June’s Brexit referendum.
“Come 6th April 2016, we’ll see changes from last years’ budget come into effect. Osborne had been planning to continue his shake up of the retirement market, potentially introducing a ‘Pension ISA’, or a flat rate of tax relief.” Peter states, “What we need is a period of stability for individuals to understand the previous changes so these plans to scrap his proposals for now, are very welcome.”
“Whilst this is just a hiatus, it doesn’t mean that individuals can sit back, as the previous changes are substantial enough to warrant a full review of your retirement planning strategy. We’d recommend that you make the most of the current system while you can.” Peter concludes.