The headline news for pension schemes in the 2017 Autumn Budget is that there is no headline news!
After being subject to a raft of changes in previous budgets and Autumn statements, the speculation about any changes to pensions tax relief, the Annual Allowance or the Lifetime Allowance has failed to come true. The biggest change for pension schemes is the previously announced increase in the Lifetime Allowance in line with CPI to £1,030,000 from April 2018. The Annual Allowance remains fixed at £40,000 and the Money Purchase Annual Allowance at £4,000.
In terms of other savings products, again, the story seems to be steady as she goes. The increase in the Lifetime ISA predicted by some forecasters appears to have been overlooked for other measures to get younger people onto the housing ladder (more of which in a minute). There is no change in the ISA subscription limit for the 2018/19 tax year, which remains fixed at £20,000 and the savings income zero-rated band remains at £5,000.
For Income Tax, the personal allowance will be set to £11,850 from April 2018 and the Higher-Rate Threshold raised to £46,350. The state pensions will increase by 3% as they are still subject to the triple lock. This means the Basic State Pension will rise by £3.65 per week and the New State Pension by £4.80 per week. Once again, no shocks there.
From a pensions perspective, the headline announcement that may cause consternation is the announcement of zero stamp duty for first-time buyers for properties under £300,000 (and the first £300,000 for a property up to £500,000). This will mean that many young people will be further incentivised to save for a property and get on the property ladder; good news for the savings industry (it could prompt more LISA sales), but this could be detrimental to the pensions industry, as younger savers prioritise saving for a property over saving for retirement. More disappointingly, there were no further proposals on how to fund social care for older people. Longer-term planning on how to turn this property capital into funding for retirement and long-term care needs to be implemented now to avoid a welfare gap in future decades.