Pensions - Articles - Cuts to pension tax breaks hinted at by the Chancellor

 Kate Smith, Head of Pensions at Aegon comments: “We will be watching closely to see if the Chancellor follows through on his hints and makes cuts to pension tax breaks. It seems inevitable that changes to pension tax relief are to come in the future. Pensions have been seen as ‘low hanging fruit’ by the government. We are not expecting to see any radical changes to the pension tax framework in this Budget due to the combined complications of implementing these for Defined Benefit schemes and the Brexit effect. If the Chancellor does follow through, the likelihood is that he will target the annual allowance rather than the £1million lifetime allowance, which is easier to change and likely to bring in a steady flow of tax revenue. Those hit the most will be defined benefit savers, many of them government employees.

 “Any pension tax cut will create uncertainty and can be counterproductive by putting people off pension saving. The government should be thinking long term and have joined up policies working across the board. Ultimately any changes made now are set to impact a generation of pension savers, many of whom are only just beginning to save into a pension as a result of auto-enrolment.”