Industry wish list: What do you want from the Budget?

Although the general consensus among industry experts was Wednesday's Budget would be a quiet one, they did not completely rule out any rabbits lurking in the Chancellor's hat.

The changes, which would see the MPAA cut from £10,000 to £4,000, had already provoked criticism from the industry during its consultation, so it's unsurprising the industry is hoping for a policy reversal.

Fidelity International head of pensions policy Richard Parkin said: "We would urge the government to announce a postponement of the implementation of the MPAA reduction and work with the industry to see if there is a better way of limiting recycling without limiting flexibility."

Meanwhile, Old Mutual Wealth pensions expert Jon Greer shared a similar message: "Abandoning the proposed reduction in the MPAA to £4,000 would be a good step. It risks inadvertently penalising individuals that want to continue funding pension contributions in their late 50s and beyond after they have flexibly accessed some money purchase income".

Greer explained a person wishing to reduce their hours and top-up income using their pension would find their opportunity to continue saving into a pension "severely depleted". 

"This is at odds with the growing trend toward more flexible working lives and a phased approach to retirement," he said.

Major pension changes "unhelpful"

Another common desire was that pensions were simply left alone. Rachel Vahey critisiced the "constant tinkering with pension legislation", she argued it only served to put people off saving for their later life.

KPMG pension partner David Fairs was also keen to stick with the status quo. For instance, he said, any further changes to the regulation of defined benefit schemes ran the risk of completely overwhelming employers and scheme trustees, especially if these were to be implemented alongside a range of tax changes.

However, Ascot Lloyd pensions technical manager Jim Stevenson wanted to see a return to the debate around the "ISA-style tax relief system" where money is taxed before it goes into a pension pot rather than later when it comes out.

Alterations to IHT rules "long overdue"

Changes to inheritance tax (IHT) were also a topic on many an expert's minds. Old Mutual Wealth tax and financial planning Rachael Griffin called for the government to amend the IHT allowances.

She said: "There is a good case for the £3,000 limit to be increased after 35 years of stasis. The allowance on gifts has not been increased since 1981. That means it would be worth over £10,000 had it tracked inflation."

Greer agreed: "Alterations to inheritance tax rules that are inconsistent with pensions freedoms are long overdue."

Under the current rules, if a pension transfer is made while someone is in ill-health there is a risk that HMRC will challenge the IHT-free status of the death benefits if the person passes away within two years of the transfer, he explained.

Meanwhile, Prudential head of technical Les Cameron said: "I would look to make it easier to gift money away for IHT planning to encourage the cascading of wealth to the next generation. An increase in the gifting allowances, which have been frozen for many years, or a reduction of the seven-year time-limit for gifts to leave the estate would be good". 

 

 

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Your profession
• Regulation
• Budget 2017
• IHT
• MPAA
• Pensions
• Philip Hammond