Pensions - Articles - Budget is bittersweet for pensions

 Tapan Datta, Head of Asset Allocation at Aon Hewitt said: We see this budget as ‘bittersweet’. Sweet initially because austerity has delivered some meaningful deficit reductions, and he has headroom for some near-term give-aways which is what he has allowed for, and that is not a bad thing given the state of the economy.

 But bitter later because of the big growth downgrades (productivity related) which mean much smaller fiscal headroom. The small fiscal loosening does reverse in Years 3 onwards. Austerity fatigue and Brexit pose obvious additional risks to the picture.”

 Debbie Falvey, Aon Hewitt DC Proposition Leader, continued: The Budget was unusually quiet on the subject of pensions, but the increase of the Lifetime Allowance in line with CPI will be going ahead as planned.

 There should be no doubt though that the welcome focus on supporting younger people to buy their own home by removing stamp duty for most first time buyers will present a challenge for pension savings. There will be an increase in the incentive to divert scarce resources to saving for home ownership at a time when auto enrolment contribution rates are about to start increasing .

 Employers might want to ensure they provide help and support to ensure employees make informed decisions and offer additional savings options alongside their pension schemes.”