Monthly Archives: November 2017

Autumn Budget
November 2017

Mr Hammond will probably be pleased if commentators decide that his Autumn Budget was a steady-as-she-goes, broadly modest Budget.  After the national insurance u-turn he was forced to make after his March Budget this year, that was probably his aim.

Please click here to view our Budget Summary.

In any case, for a variety of economic and political reasons, the Chancellor announced a relatively modest net tax giveaway of just under £1.6 billion for the coming tax year.

His main attention-seeking move was to give first time buyers an exemption from stamp duty land tax on the first £300,000 of value for properties worth up to £500,000.  Rumours – probably from the Treasury itself – had trailed changes along these lines, and the new relief represents more than a third of his net giveaway.

With income tax, the changes were much less dramatic – increasing both the personal allowance and the higher rate threshold by 3% – the standard inflation-linked increase.  ISA investors saw their main ISA and lifetime ISA investment limits frozen and only children saw a small increase in their specialist ISAs.  There was better news for pension savers who enjoyed a £30,000 increase in the lifetime allowance and thankfully no cuts to the annual allowance.

Several measures were designed to introduce much more of a focus on risk investment for venture capital trusts, enterprise investment schemes and seed enterprise investment schemes.

Most Chancellors tend to cram all the painful announcements into Budgets at the start of a Parliament; for a range of reasons, Mr Hammond decided that he did not need – or perhaps couldn’t afford – to do this.

If there are any issues in this Budget that you would like to discuss in more detail, or if there is anything else we can help you with, please get in touch with us.

Pensions Dashboard to be taken forward by DWP
November 2017

Pensions Minister Guy Opperman has confirmed that the Department for Work and Pensions will take forward development of the Pensions Dashboard.

It was announced in the 2016 March Budget that a pensions dashboard would be created.  The industry was tasked by Government to develop a prototype to show that the technology to connect everybody in the UK with data from all of their various pensions, including the State Pension, can work.

The prototype was successfully delivered in March but work has continued to research consumer needs, engage with the wider industry, refine technical standards and look at how it could be appropriately regulated.  The project has brought together representatives from all parts of the pensions industry as well as tech firms, and has consulted with consumer groups.  The project group has recently set out its recommendations for what should happen next.  The key objective is that consumers should have a right to access information about all of their pensions in one place of their choice in a standardised digital format, through regulated services.

Steps outlined to achieve this include:

  • Government legislation to ensure all pension providers and schemes make their data available
  • An implementation timetable, and an implementation and governance body which will establish the necessary standards for all involved
  • Establishing a non-commercial, Government-backed platform which will operate alongside services from third parties

Auto Enrolment update
November 2017

If you don’t keep up your pension contributions, The Pensions Regulator will find out!

Automatic enrolment (AE) is now business as usual for most employers.

Pension providers help the TPR (The Pension Regulator) to identify non-compliance.  If an employer sets up a scheme but never pays into it, the TPR can be notified.  Each case is examined and, if they find enforcement action is warranted, they act.  Unpaid Contribution Notices (UCNs) can be sent requiring all backdated contributions to be paid within 28 days.

In the last quarter, TPR issued 753 UCNs demonstrating that they will take enforcement action where necessary.

New tool makes re-enrolment dates clearer

TPR recently launched a new tool to help employers going through re-enrolment.  Every three years, employers must put eligible members of staff who left their automatic enrolment pension scheme back into it.  But exactly when they have to do this varies from employer to employer.

The re-enrolment tool is easy to use and clearly displays key dates in the process, helping employers to understand what to do and when.   Please get in touch if you would like any help using the re-enrolment tool.

Statistic of the month

This month marks the busiest period for declarations of compliance yet, with more than 100,000 already completed by employers in November.

Completing the declaration is an employer’s legal duty under automatic enrolment.  It must be carried out regardless of whether or not the employer has any staff to enrol.

If your declaration deadline is approaching, make sure you comply with your duties and complete it as early as possible.

Are you ready to increase contributions?

From 6 April 2018, the minimum contributions employers and staff are required to pay into their automatic enrolment pension increases to 2% for employers and 3% for employees.  This increase has been planned since automatic enrolment started and will help employees to save towards an adequate income when they retire.

Employers will need to work out how the changes affect them, including checking that their payroll services are compatible.

Make sure you have communicated the benefits of the changes to your employees.  If you’d like any assistance with this, please contact us.

Source:  The Pension Regulator

A pensioners’ bonanza?

State pensions will rise by 3% next April, but it’s not all strictly good news.

On the day that a CPI inflation rate of 3% was announced, the BBC website covering the rise had a picture of pensioners “dancing for joy”.  The supposed reason for their jollity was that the 3% September inflation figure was the one that would be used to fix state pension increases from April 2018.

The BBC’s response was understandable, but simplistic.  Pensioners will be no better off because their increased income is, in theory, matched by increased prices.  In practice they may be marginally better or worse off, depending upon how their spending pattern compares with the “shopping basket” used to calculate the CPI.  The twelve components of that index showed annual inflation ranging from 4.3% (alcoholic drinks and tobacco) to 1.4% (miscellaneous goods and services).

…and on private pensions?

At least state pensions have inflation linking.  Such protection is by no means certain among private pensions.  Most large occupational final salary schemes offer inflation-proofing to their pensioners, although outside the public sector schemes increases may be capped.  In the past, many people drawing benefits from personal pensions and similar arrangements have chosen to buy an annuity with no inflation protection.  While the initial (level) income was much higher, its real value was steadily eroded by inflation.  For example, £1 in September 2007 now has a buying power of 78.7p, based on CPI inflation.

Have your retirement plans allowed for retirement inflation?  In today’s annuity market, an inflation linked annuity for a 65-year old costs about 60% more than its non-increasing counterpart.  You may well choose not to buy any form of annuity at retirement, but the costs of providing enough to be ‘dancing for joy’ will still be substantial.

Occupational pensions are regulated by The Pensions Regulator.  The value of your investment can go down as well as up and you may not get back the full amount you invested.  Past performance is not a reliable indicator of future performance.   Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.