Autumn Statement – what it means for pensions

There were four key points affecting retirement savings in this year’s Autumn Statement.

No change to the Annual Allowance but…
The Annual Allowance is the maximum amount of money you can save into a pension each year and still benefit from tax relief. This will stay at either £10,000 or £40,000, depending on your earnings. However, the Government wants to reduce the Money Purchase Annual Allowance (MPAA) from £10,000 to £4,000, from 6 April 2017 (following an industry-wide consultation that will take place soon). The MPAA affects anyone who has started to access their retirement savings, but then wants to rebuild or continue to pay into those savings, whether through the AHBRSP or another scheme. The rules are complex and some exemptions apply, so you may want to seek financial advice if you have, or are planning to, access your retirement savings.

Salary Sacrifice (SMART)
Saving for retirement (along with childcare vouchers, cycle-to-work and ultra-low emission car schemes) will continue to be provided under salary sacrifice arrangements. However, the Government is to stop salary sacrifice being used for a range of other employee benefits, such as health screening, company cars and mobile contracts, from 6 April 2017. We will keep you updated.

Triple-lock on State Pensions
Since 2010 pensioners have benefited from the so-called ‘triple-lock’ ensuring their State Pension goes up every year either in line with inflation, the average rise in earnings or 2.5% (whichever is higher). The Government said it will keep this in place until 2020, but has yet to comment on what will happen after that.

Protecting your savings
The Chancellor announced a crack-down on pension scams, including cold calling and suspicious transfer proposals, to help prevent people with retirement savings from falling victim to fraud. It is estimated that £19m of savings were lost in scams of this kind last year alone.