Following the Prime Minister Theresa May’s calling of a snap election for 8 June, the government was forced to drop a number of contentious measures from the Finance Bill to ensure its passage through Parliament before MPs end the session.
Sipp provider Suffolk Life, part of Curtis Banks, surveyed 151 advisers on what they plan to advise clients to do following news of the proposed cut in the money purchase annual allowance to £4,000 to cut down on ‘recycling’ of pension investment for those already drawing their pension.
The survey found that 39% of the 151 advisers who responded will advise their clients to contribute no more than £4,000. A similar number – 44% - will only allow their clients to contribute more than £4,000 on the understanding that they may face a retrospective tax charge in the future.
Just 17% of advisers questioned said that they would be willing to allow their clients to contribute over £4,000 by making the assumption that the MPAA is now £10,000 by default as no change has occurred.
If the survey findings are correct, it implies that most advisers are factoring in that the MPAA cut will go ahead post the election as the government has indicated this although there is no guarantee this will happen as it will depend on the government reinstating the plans.
Suffolk Life’s pension technical manager Jessica List said: “The survey results showed a cautious, mixed reaction from advisers, indicating that there’s no clear view of what the Government might do next, following last week’s announcement.
“Advisers have been left in an incredibly difficult position: they don’t want their clients to miss out on a potential window of opportunity but understandably the majority don’t want to risk advising them to do something which could later incur a tax charge.”