Isio sets out what it expects to see and what it would like to see across pensions, tax, savings, and investments ahead of the Spring Budget

by | Mar 6, 2024

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Given the raft of announcements in last year’s Mansion House speech and the Autumn Statement, we are expecting a fairly quiet budget in term of brand-new ideas in some areas such as pensions.

However, if the Chancellor has limited room for manoeuvre and is looking for some vote winning announcements, he may be willing to consider more radical proposals across pensions, tax and savings, and investments. Below Isio outlines what it expects to see in the Spring Budget versus what it would like to see.

What Isio expects we’ll see for pensions in the Spring Budget:

 
 

Iain McLellan, Director at Isio said: “It’s likely we’ll see further engagement this year from the Government on the proposed ‘Pots for Life’ scheme. This is a complex area and while the majority of the industry has raised significant concerns about the introduction of the scheme, it could simplify retirement planning for many savers, streamlining multiple pots into one manageable fund. We would rather see the Government focus on delivering on existing initiatives that are already in development rather than adding to the list.

“We need to encourage better retirement savings among younger workers. We expect the Government to set out a timetable for the extension of auto-enrolment to be implemented. Younger savers continue to struggle in the current economic climate to save for retirement and their futures, so measures that address these issues would be welcome. Clarity and transparency will be key in navigating these changes.”

“Isio expects to see a re-statement of the reduction to tax on surplus refunds from 35% to 25% from 6 April, first announced in the Autumn Statement. By reducing the tax burden on surplus refunds, pension schemes may find sponsors are more willing to defer transfers to insurers in order to use existing assets to target longer-term growth.

 
 

What Isio would like to see for pensions in the Spring Budget:

Iain McLellan, Director at Isio said: “As a further step in the Government’s plan to boost the economy and increase returns for savers, the Chancellor recently announced British business pension fund reforms. Pension funds will now have to publicly disclose how much they invest in UK businesses compared to those overseas. improve outcomes for savers and consolidate if they are offering poor value. Isio would like the Government to consult further on these reforms to clarify the detail behind these proposals as they run the risk of being counter-productive, if they result is herding and a short-term focus on investment strategies.”

The ‘Mansion House’ reforms aimed at boosting investments in UK industries would reshape pension fund strategies. The Government’s recently launched a consultation looking at options for using surpluses to unlock the huge value potential stored in UK DB schemes, including introducing a statutory override to allow scheme rules to be changed to enable surpluses to be distributed. Tax rules need to be changed to allow one-off payments to members and looking at safeguards to ensure excessive surplus distributions are made. Transparency on how these reforms benefit members is essential. Isio would like to see the Government commit to a clear timetable to introduce these changes.”

 
 

What Isio expects we’ll see for tax, savings, and investments in the Spring Budget:

Mark Campbell, Head of Wealth Proposition at Isio said: “For individuals, Chancellor Jeremy Hunt has hinted help could be on the way for first-time buyers who face losing £1,000s of their own savings when withdrawing funds from Lifetime ISAs (LISAs) to buy homes above the scheme’s property price limit. Isio expects dedicated support to help boost younger generations savings to be at the forefront of the Government’s mind ahead of this year’s Spring Budget. Increasing the £450,000 price cap for first time buyers using the Help to Buy or LISA scheme would be welcome.”

What Isio would like to see for tax, savings, and investments in the Spring Budget:

 
 

Mark Campbell, Head of Wealth Proposition at Isio said: “The financial burden on individuals and families remains high in the current economic climate. Younger generations continue to find it challenging to save for retirement and their futures. Measures that support addressing these issues and increasing the access to, and availability of financial support where appropriate and possible, would be welcome. 

“We feel that there is the opportunity to leverage the trusted position held by employers to support their employees in their financial well-being, be that through providing access to education, coaching, guidance or advice to support employees to make fundamentally important decisions in a more informed and supported manner.”

The Government’s potential plans to launch a tax-free ‘British ISA’ investing only in UK company shares has the potential to revolutionise the investment landscape.

 
 

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