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Autumn Budget - Pensions: What measures do you expect Rachel Reeves to announce?

ended 08. October 2024

A journalist on the Daily Express is looking for exclusive commentary on what pension reforms are expected to be announced during the Chancellor's Autumn Budget.
- Who are they most likely to impact?
- Why do you think these measures will be announced?

This will form part of an article series of experts sharing their predictions on certain fiscal areas that may be addressed in the Budget, in the run-up to the announcement.

The journalist also needs a headshot - can you send to me at jonny@newspage.media
 


 

7 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
It looks like the tax relief on pension contributions may be safe for now, but that does not mean pensions won’t be hit on the 30th. The Chancellor could limit the tax free element of the pension commencement lump sum. This would be a major change and it will impact those who have been planning their expenditure and cash flow in retirement. It may also reduce the desirability of those using pensions as part of their retirement planning in favour of other asset classes or savings plans.
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Anita Wright
Independent Financial Adviser at Ribble Wealth Management
I anticipate that pension reforms will likely focus on two key areas: reducing the annual allowance (AA) for pension contributions and altering the tax rules around pension drawdown for those who die before the age of 75. If the AA, currently £60,000, is reduced it will primarily impact higher earners. They will see a reduction in the amount of tax relief they can claim on their pension contributions. Cutting the AA is a straightforward way for the government to save billions without overly complicating the system. Any change in the taxation of pension drawdowns for those who die before 75 will affect their beneficiaries. Currently, pensions left behind before 75 are passed on tax-free. The distinction between those who die before and after 75 is arbitrary, and by applying a consistent tax rate, the government can argue for fairness. This reform, while less impactful overall as most people live beyond 75, would still generate revenue from pension savings and may be seen as an easy win.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
As Chancellor Reeves' "painful" budget threatens to shake up pension pots nationwide, a paradigm shift looms, potentially altering a generation's retirement plans. Labour's commitment not to raise income tax, NI, or VAT has put pension pots in the crosshairs, and while the tax raid on pension contributions may be off the table, other reforms are still in play. Reeves may consider reducing the amount that can be withdrawn tax-free upon retirement, which could significantly impact retirees' financial planning. There's also speculation about imposing inheritance tax on unused pension pots, which are currently passed on tax-free, potentially affecting wealth transfer strategies and estate planning. However, the Chancellor is walking a tightrope between fiscal responsibility and political palatability. Her decisions on pensions could either be the cornerstone of a new, more equitable savings culture or the first domino in a chain of unintended consequences, in a case of budgetary déjà vu.
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Chris Barry
Director at Thomas Legal
Pensions have traditionally been vehicles for no tax on the way in and tax paid on the way out.

Currently businesses get full national Insurance relief on all employee and employer pension contributions. Employees receive full income tax relief and on the way out, pension holders can take 25% of their pension pot as a tax free cash lump sum.

Rachel Reeves has the opportunity to reduce income tax relief on pension contributions which could raise a lot but may not prove popular as it could be seen to be a tax on working people.

To cut the NI relief for businesses may prove a more popular move as businesses would swallow the hit rather than employees.

Removing or reducing the nil rate band for cash lump sums on the way out will likely prove unpopular given the winter fuel payment has just been withdrawn for those on the lowest pension incomes.

A staggered implementation, and to take effect from next tax year. rather than immediately would allow people to plan to mitigate some pain
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David Nicklin
SSAS Consultant at Retirement Capital
The Chancellor is poised to target pensions in this Autumn Budget, and the fallout could be significant. High earners and self-employed individuals, particularly those saving into pensions are in the firing line. We’re expecting potential cuts to pension tax relief, new caps on contributions, reducing the tax free lump payment to £100,000 and the inclusion of your pension fund into your taxable estate for Inheritance tax, all in the name of balancing the books. You might ask why, but it's simply because pensions are a politically safe space to raid, offering the Government a quick win with voters who see it as cracking down on wealthy savers. The reality is this could severely impact business owners who rely on flexible pensions to grow their business and wealth and plan for retirement. These changes could shift the landscape entirely and result in an own goal for business growth.
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David Robinson
Co-Founder at Wildcat Law
Keep calm and carry on, nothing to see here! As we have seen with the winter fuel payments, taxing, or reducing the income of, pensioners is incredibly unpopular. I have lost count of the number of budgets where we have predicted pension changes in recent years only to find no changes announced. This budget is likely to be exactly the same, a frenzy of predictions with no changes. This is because pensions changes are incredibly expensive to administer and implement. They typically further complicate what is already a highly complicated system with legacy regimes and exceptions. And we are still not saving enough as a population for retirement.
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Mark Scott
Director and IFA at Positive Advisers Ltd
I predict that Rachel will attack inherited pensions.

Over recent years, pensions have moved from being a tool for the masses to save for their retirement to becoming an attractive product for the wealthy to transfer assets to their children free from inheritance tax.

If you're already wealthy and can access pensions, you can build an unlimited pension for your children free from inheritance tax. If you're already wealthy, your children will likely create wealth in their own right, so they may never use this pension as an inheritance.

The pot would grow tax-free and then pass to grandchildren free of inheritance tax.

It could go on and on....

I hope they do not tax pension pots on the first transfer to spouses or children. But I will understand if taxes are imposed on unused inherited pension funds. This would force the money back into the taxable world and put the capital back to use in the economy.