Pension measures in yesterday’s Budget confirming banning cold-calling and raising the lifetime allowance are only small solutions for larger problems, according to St James’s Place.
The advice giant responded to the fairly quiet Budget for the pensions sector by noting that no proposed solutions are long-term.
SJP head of pensions strategy Claire Trott says news that the tapered annual allowance will not be scrapped and that contribution rules will not be simplified in general is a disappointment for the industry.
She says: “We had hoped that there would be some good news for low earners in ‘net pay’ pension schemes who are still missing out on up to £780 per year on tax relief, that those in ‘relief at source’ pension schemes currently receive.
“This could have been an easy win for the Government to encourage lower earners to boost their pension savings within auto enrolment schemes.”
Chancellor Philip Hammond says a long-awaited ban on cold-calling will come into force once final regulations on the issue are laid down before parliament this Autumn.
Trott says the progress is positive but not a long-term solution.
She says: “This won’t stop pension scams, although anything that can be done to stop even one person losing their hard-earned pension is worthwhile and this has been a long time coming.
“We all need to remain vigilant to changing scams and pension schemes themselves need to be at the forefront and protect their members as best they can.”
The rise in the lifetime allowance to £1,055,000 was also confirmed in the Budget.
The increase was slightly more than expected, with the figure initially planned to increase in line with September’s figures for the Consumer Price Index to £1,054,800.
Trott notes the news follows mounting fear that the allowance would be cut to help raise the tax taken on pensions at retirement.
She says: “Again, had this been changed, more trust in pensions would have been lost at a time when company pension scheme members are on the rise because of the success of auto enrolment.”
With no wider changes to the pension legislation outlined however, Trott says the pensions sector can look forward to a “much-needed period of calm.”