HM Treasury has announced the Pre-Budget Report will be delivered at 12.30pm on Wednesday 6 December, with ASP, scheme pensions and ISAs all expected to be on the agenda.
Following on from last year’s speech which delivered a U-turn on residential property being allowed in Self Invested Personal Pensions (Sipps), the pensions industry is expecting another important announcement on the issue of Alternatively Secured Pensions (ASP).
Ed Balls, Economic Secretary to the Treasury has already hinted the PBR will deliver some clarity on the issue, after Balls has made it clear ASP is not meant to be for widespread use and should be limited only to those with religious objections, such as the Plymouth Christian Brethren.
Standard Life says as it would be illegal under religious discrimination laws to limit ASP to just one religious group, the government is left with three options:
- It can impose additional tax charges, which would leave it with a range of possibilities including effectively taxing ASP out of existence, in the same way as it dealt with residential property in Sipps
- It could make changes to ASP, such as forcing members to take a minimum income
- Or it could scrap ASP, although Standard Life don’t believe the government will do this as it could lead to other discrimination issues and would be too embarrassing a U-turn for the government.
Andrew Tully, marketing technical manager at Standard Life, warns if the government makes another major policy about turn, it risks further damaging the already low confidence which people have about pensions.
He adds: “ASP is, and always will be a niche product and it gives government a bigger tax revenue than an annuity does. If the government wants to have more control over when it receives tax, then there are various ways they can tweak ASP without taxing it out of existence as they did with residential property almost exactly one year ago.”
In addition Standard Life expects the PBR to contain some associated changes to the way in which scheme pensions are offered through Small Self Administered Schemes (Ssas) and Sipps, as under current rules when a member dies the remainder of the fund can be passed onto other members without incurring an Inheritance Tax (IHT) charge.
Meanwhile as Ed Balls has already confirmed changes to the ISA regime will be included in the PBR, Scottish Widows is hoping the speech will include a timetable for the proposals to remove the mini/maxi limits within ISAs, along with some additional improvements and clarifications.
Anne Young, savings expert at Scottish Widows, says the previously announced proposals to improve simplicity is a sensible decision, but says the insurer wants this to go further and is asking the government to rename Cash ISAs as Savings ISAs, while stocks and shares ISAs should be called Investment ISAs, to increase the public’s understanding of where their money will be held.
She adds: “It is key for the government to introduce a simple savings structure to encourage more people to save and to consider additional ways in which to do this. We believe there is an opportunity for the industry to be involved in further consultation on such initiatives.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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