Has the Chancellor just quietly killed off pensions?

Richard Smith

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Spence & Partners asks whether the UK is just one generation away from the death of pensions, thanks to the Chancellor’s announcement on the creation of the new Lifetime ISA.

Richard Smith, Head of Corporate Advisory Services, Spence said: “On the face of it, in yesterday’s Budget the Chancellor made very few changes to pensions taxation. Setting aside for now the increased bill for employers in public sector pension schemes, there was little “new news” to affect existing pension schemes.

“The introduction of the Lifetime ISA provides an attractive new savings opportunity but only for the under 40s – yes the Government is allowed to be age discriminatory even if businesses aren’t. However, at what cost? Will the younger generation, faced with a choice between a flexible ISA-style product with a government-funded bonus and locking their savings away in a vehicle they don’t understand, leave pension saving to the “more mature” workers? Are we now just one generation away from the death of pensions?

“Yesterday’s announcement has introduced yet more complexity to the savings decisions facing younger workers. They now have a choice to make between pensions, LISAs, ISAs, help-to-buy ISAs and normal savings. Each of these have different rules, but only one has the benefit of employer contributions. It seems odd that, just as the Government is pushing through auto-enrolment legislation, it introduces a new product that will discourage millions of people from saving into a pension.

“The need for effective guidance and advice has never been so strong – the question now is whether we are all up for the challenge?”

Richard Smith

Post by Richard Smith

Experienced pensions actuary and expert in accounting for pension costs, liability management exercises, dealing with the pensions issues arising from M&A activity and scheme funding.

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