Auto-enrolment reforms
“Those earning less than £10,000 in total or those with multiple jobs all paying less than £10,000 currently miss out on being automatically enrolled into a workplace pension with an employer contribution. For them, changing the rules and thresholds here would offer a valuable step up in their pension savings. Women are more likely than men to fall into this trap so a change here would also help ‘level up’ and reduce the gender pensions gap.”
Provide details and engage financial services industry on social care funding deal
- ‘Care cost jam jars’
“Last month, the Government unveiled its long overdue new deal on social care funding, a major announcement which in more normal times might have been the jewel in the Budget crown. The headlines include a cap of £86,000 on how much anyone will have to pay for care costs and an increase in NI to help pay the Government’s share of the extra costs, but there’s much more detail to be thrashed out.
“The care cost cap, albeit with extra costs for ‘residential’ room and board, gives individuals greater certainty to plan ahead for possible care costs while protecting inheritance aspirations. We hope the Budget announces a consultation on how the financial services industry might help people plan ahead, with care insurance a possible approach although costs might be high. Some people might prefer to build up savings in a ‘care cost jam jar’, possibly within their pension, so they have the funds available if they need them. It’s increasingly common for people to keep their pension pot invested into retirement, drawing a regular income, and they could keep their jam jar savings ringfenced here too. We expect many people will want to seek financial advice so they know they’re doing the right thing in this new area.”
Self-employed crying out for ‘levelling up’ of their pensions
“Something dramatic needs done on pensions for the self-employed. While auto-enrolment has successfully boosted the retirement savings of millions of employees, the self-employed are not included and with every year that goes by, they are falling further behind their employed counterparts. With auto-enrolment reaching its 10th anniversary next year, finding solutions to encourage default retirement savings for the self-employed would be a huge step towards ‘levelling up’ pensions for this vital and growing part of the workforce.”
Chancellor must avoid third round of income tax and NI increases
“The Government has spent a huge amount supporting individuals and businesses throughout the pandemic. The Chancellor has always been clear that this will have to be paid for, and while growth initiatives will help, tax increases were inevitable, even for a Conservative Government.
“In his Spring Budget, the Chancellor froze till April 2026 the thresholds at which individuals start paying basic rate and higher rate income tax, rather than increasing with inflation. This means as individuals’ earnings increase, they’ll pay income tax on a larger proportion of these earnings and more will cross into paying higher rate income tax, leading overall to a higher income tax burden.
“On top of this, the social care funding deal means individuals alongside employers will pay an extra 1.25% in National Insurance from April 2022, becoming a separate ‘levy’ a year later.
“While Government finances look challenging for the years to come, and with the prospect of a winter of sharply rising prices, we’d hope the Chancellor will avoid a third round of income tax or NI hikes in the October Budget.”
