Autumn Statement

Mansion House Reforms

The Autumn Statement builds on the Chancellor’s Mansion House speech in July. This announced a package of measures to reform the pensions market. Many of these are aimed at employer pensions and auto enrolment, but some measures may have an impact on the individual market.

Ending the proliferation of small pots

The Government wants to explore if a lifetime provider model would improve outcomes for savers – you may have read about the proposed pension ‘pot for life’ which an employee will have and if they change employers the new employer will be required to pay into this. At present employers can offer a pension of their choosing so if you change jobs regularly you may end up with a handful of different pensions. This pension pot for life is potentially welcome news, but will need safeguards in place to ensure that the ‘pot’ chosen is good value for money and costs will not be prohibitive for employers.

£250 million will be committed to two successful bidders under the Long-term Investment for Technology and Science initiative. This will create new investment vehicles tailored to the needs of pension funds, and together with other sources, will provide over a billion pounds of investment into UK science and technology companies.

While there was no additional detail in the Autumn Statement, we do now have the confirmation that removal of the lifetime allowance will be going ahead in April 2024. We know the devil will be in the detail which has now been published in the Finance Bill and we are analysing the legislation to understand how the changes will be implemented.

The measures will clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as transitional arrangements for those with older pensions, and reporting requirements. We have however had confirmation that on death before age 75, beneficiary drawdown plans and beneficiary annuities will continue to be excluded from income tax as per the previous rules. An earlier policy paper had suggested that this tax treatment may change.

Once we have analysed the Finance Bill we will put the key points into an article to let you know the detail.

Individual Savings Account (ISA) simplification

The Government has announced measures to simplify how ISAs work:

From 6 April 2024:

• Multiple subscriptions will be allowed in each tax year to ISAs of the same type.
• Where an existing ISA account has received no subscription in the previous tax year the requirement to make a fresh application will be removed.
• Partial transfers of current year ISA subscriptions between providers will be allowed.

If you have any questions about how these changes or anything else in the Autumn Statement impacts you, speak to your usual Old Mill financial planner.