Where was the Budget help for long-term saving?

Natalie Holt, journalist with Money Marketing Photo by Michael Walter/Troika

Chancellor Philip Hammond has delivered his first Budget, and by all accounts it was pretty underwhelming. For those of us used to the fireworks and rabbits out of hats delivered by his precedessor, this new style of Budget delivery takes some getting used to.

There was precious little on the much trailed package of reforms to long-term care funding, save for a reference to a social care green paper later this year. Hammond even made a point of saying there were never any plans to “exhume the much hated death tax”.

There was also practically no reference to pensions policy, or changes to the personal allowance or higher rate tax threshold, the usual mainstays of a Budget speech. Even Brexit was glossed over in a no more than cursory fashion.

In the run-up to recent Budgets, advisers and providers are usually found to be clamouring for a reprieve from the constant pace of pension policy tinkering. This time they have got what they wanted.

But it may be a case of being careful what you wish for. It seems some were actually hoping for some U-turns this time around, particularly on the much criticised reduction to the money purchase annual allowance.

References to the Lifetime Isa were also noticeable by their omission. In an upcoming cover story, Money Marketing sets out that with the launch imminent, not only are providers turning their backs on the product (for now at least), but consumers are too. The lack of providers is said to have got the Treasury so worked up it is calling firms on a weekly basis to check if they will offer the product.

The advice allowance, which will be introduced at the same time and allows savers to access their pension pot to pay for advice, has also been met with the cold shoulder.

These twin initiatives, engineered under George Osborne’s watch, are either met with disinterest from advisers or providers, or outright apathy from savers.

It is no wonder Hammond saw fit to deliver a pension policy-lite Budget, given that the projects already in train run the risk of failing before they have begun.

But the Chancellor’s own policies do little to instill confidence that the Government is trying to incentivise long-term saving and investment. The substantial cuts to both the dividend allowance and the money purchase annual allowance are cases in point.

Policymakers need to start engaging better with those at the coalface. If this happened, we could get to a more informed starting point for pensions and investments than the mish-mash we have at the moment.

Natalie Holt is editor of Money Marketing – follow her on Twitter here