A quiet Budget day for Pensions

9th March 2017 by Zoe McLaughlin

The Chancellor has delivered his Spring Budget. There was very little this time, that effected pensions, but here is a summary of what was included in the policy paper.

State Pensions and NIC

Since the self-employed now have access to the same State Pension as employees, Philip Hammond attempted to address the gap in NIC rates.

It was already known that the flat rate charge of Class 2 NICs on the self employed would cease from 2018 but this budget announced that Class 4 NIC rates will now increase from 9% to 10% in April 2018 and again to 11% in 2019. 

It was acknowledged that longer term demographic trends will mean that age related areas (such as the state pension) will suffer without future changes to policy. These pressures would potentially put public sector debt on an unsustainable upward trajectory.
To ensure that the State Pension remains sustainable and fair across generations, the government is carrying out the first statutory review of State Pension age.

Life Time ISA

The governments continued commitment to savers means that the Lifetime ISA announced in the previous budget will be available from 6th April 2017, this can be used to put towards a first home or those using it to fund a pension can draw on it at 60.

Master Trusts

To boost consumer protection and improve compliance, the registration process for master trust pension schemes will change to align it with the Pension Regulator’s new authorisation and supervision regime.

Qualifying recognised overseas pension schemes (QROPS)

The government will introduce a 25% charge on transfers to QROPS with immediate effect. This charge is targeted at those seeking to reduce the tax payable by moving their pension wealth to another jurisdiction, when tax relief has already been obtained in the UK. Exceptions will apply to the charge allowing transfers to be made tax-free where people have a genuine need to transfer their pension, including when the individual and the pension are both located within the European Economic Area.


Author

Zoe McLaughlin

Zoe McLaughlin

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