A quiet Budget day for Pensions
by Zoe Plowman
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
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.
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.