The Chancellor’s Emergency Budget last week contained an unusually high number or personal finance issues, but two in particular stood out for me, and we’ll concentrate on the first of them here, as well as mopping up some of the smaller changes. I’ll come back to the changes to dividend payments next time.
The first was the news that we could be set more more changes to the pension landscape, and in fact listening to what George Osborne said last week makes me think that the changes to come could be even more dramatic than the changes introduced this year. He said that he saw no reason why pensions shouldn’t be treated in the same way as ISAs, and that they should be paid out of net income and accessed free of tax, with some sort of contribution from the Government in between.
So could we be about to witness the end of pensions as we know it? It’s possible, maybe not today or tomorrow but I think we could be heading for a Brave New World of really flexible pensions where higher rate relief for high earners is a thing of the past and everyone gets the same benefit from the money they pay into their ‘new pensions’. I cant see it happening today or tomorrow but watch this space.
And while we’re talking pensions I couldn’t believe it when he said that he wanted to introduce a green paper consultation period before any changes were made. surely the time to have done that was before this year’s changes were introduced, given that as time has gone on since April we’re all realising that the changes introduced this year have perhaps not brought about all of the ‘freedoms’ and ‘flexibilities’ that the Chancellor first envisaged. That’s what happens when you let politics get in the way of pensions.
In other news on the day the Chancellor said that insurance premiums had come down for most of us, and then announced an increase to Insurance Premium Tax, no doubt leading to increases in these self-same policies that have been coming down in cost!