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

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 Plowman

View Biography