The Budget confirmed that QE is to continue, and gilt yields are therefore likely to remain low, which gives no respite to those looking to purchase an annuity in the near future.
The good news is that as expected, following the recent consultation with the pensions industry, the government is to undertake a review of the GAD tables. Indications are that, as lobbied by the ABI and others, they will look to incorporate long dated gilt yields and possibly corporate bonds into the calculation. If implemented, this could see maximum capped drawdown rates increase by as much as 10-15 per cent.
The small print confirms that the loophole whereby individuals could sacrifice part of their salary into a pension for a spouse under a flexible remuneration package has now been closed.
This technical work-around wasn't in the spirit of the legislation, and its days have been numbered for some time. Salary sacrifice for the individual can still add value however, particularly where the client is both employer and employee, or the employer is willing to add their NIC saving to the contribution.
The single-tier State Pension begins in 2016-17, which signals the end of contracting out of the State Second Pension for those in a Defined Benefit pension scheme, and consequently the end of the lower rate of NICs. The increased cost is likely to have an impact on scheme benefits, which could be amended under planned statute, and no doubt will result in the closure of some schemes.
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The Budget speech announced that The Pensions Regulator would be given "a new requirement to have a regard for the growth prospects of companies". Exactly how this objective will impact TPR and scheme funding won't be clarified until the DWP publishes the wording in the coming months.
It's to be hoped that a focus on the health of the sponsoring employer will have a positive effect on keeping some of these valuable schemes open. One thing is for certain, specialist advice in this area will continue to add value for both employers and employees.
The Government also announced a review of pension investment rules, to explore whether unused commercial spaces converted to residential property could be held in pension schemes in the future.
The rules around these conversions were relaxed earlier this year, to allow homes to be created from empty buildings without planning permission. However, the carrot of residential property in SIPP and SSAS schemes has been dangled before, only to be snatched away at the eleventh hour. It will be interesting to see if this idea progresses beyond consultation.
There were a number of positive measures confirmed, some previously announced and confirmed today. Among them were the consultation on Individual Protection against the Lifetime Allowance charge, the increase from 100 per cent to 120 per cent of GAD on 26/03/2013, and of course, the nice surprise for us CAMRA (Campaign for Real Ale) members near the end of the speech. A penny on the price of a pint isn't a huge cut in duty, but like the consultation on GAD rates, it does generate a great deal of goodwill.
I'll drink to that."

Rachel Styles, technical manager at Cooper Parry Wealth (winner of the IFP 2012 David Norton award).

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