Wednesday, 22 November 2017 15:55

Budget Nov 17: Planner relief at lack of pensions “tinkering”

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Chancellor Philip Hammond Chancellor Philip Hammond

Financial Planners have reacted with relief that pensions were largely left untouched by the Chancellor in today’s Budget and were broadly positive on some of the moves to help first time buyers.

There had been speculation that the pensions lifetime allowance could be cut, pensions relief reduced to the basic rate and that the annual £40,000 pensions savings limit could be cut to £30,000 or even £20,000.

Instead the Chancellor focused on investment, giveaways to first time buyers and younger people and promises to cut down on tax abuse.

Chartered Financial Planner Martin Bamford CFP, the managing director of Informed Choice, said: “What an interesting Budget! Relatively light on the detail, but a real commitment in there to get house building moving and improve prospects for home ownership.

“Abolishing stamp duty for first time buyers is likely to stimulate the housing market in a big way, although buyers further up the chain continue to be deterred by high stamp duty payments. It all sounded like a visionary Budget from a confident government, which makes a nice change to their recent shambolic performances. I felt quite reassured by the direction of this Budget as we enter what Hammond described as a critical phase in the Brexit negotiations over the coming weeks.

“Very little, if anything, on pension changes. Once again many individuals will have unnecessarily rushed into making contributions to get higher rate tax relief or withdrawn tax-free cash in case it was being abolished. I suspect there will be more detail on pension changes in the accompanying documents which we now need to read carefully.”

Fellow Charterted Financial Planner Keith Churchouse CFP, director of Chapters Financial, said he was surprised pensions were left almost untouched.

He said: “I think the surprise part of the budget was not in it! Historically, there is usually much ‘give on one hand and take on the other’. But this Budget seemed to stop at the first line and raises the sceptre of overall affordability of the giveaway, especially in much needed housebuilding, set against increased UK public sector borrowing and lower growth forecast.

“Very great news for first time buyers and those stuck in ‘generation rent’ situations, but I hope the economics of this Budget do not unpick on affordability later.”

Nigel Green, founder and chief executive of deVere Group, said: “Philip Hammond has done something extraordinarily positive in this Budget – he’s not tinkered with pensions to raise cash.

Mr Green added: “This is particularly remarkable because he needs an extra £8bn for the expenditure to which the government has already committed – and he has resisted the temptation to raid pensions.”

He continued: “For far too long successive British governments have deemed people’s hard-earned retirement funds as an easy, ‘go-to’ option when it needs to bolster revenue.

Keith Sheehan, deputy head of Financial Planning at UBS Wealth Management, said: “Philip Hammond’s silence on the annual allowance spoke volumes. Though many will be relieved to have avoided further restrictions or tapering, we were hoping to see a simplification of the rules. As they stand, the rules are so complex that it is difficult even for professionals to ensure they get it right, let alone those planning their long-term savings.”

Malcolm McLean, senior consultant at Barnett Waddingham, said: “After all the pre-budget speculation that pension tax allowances might be cut or adjusted, it came as a relief that no such proposals were made in today’s Budget.

“This was very much a steady as you go Budget, with no major surprises – in fact there were no new pension related changes whatsoever in the Chancellors’ address to the House. Hammond has tried to address the issue of intergenerational unfairness through other means than pensions this Budget.”

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