Spring Statement Pensions Preview: A quiet fiscal event for pensions with tax tinkering to dominate

  • Complex consultations and General Election on the horizon could deliver quiet budget for pensions industry
  • State Pension triple lock likely to be backed by Conservatives with tax cuts expected to dominate

Broadstone, a leading independent pensions, employee benefits, investments and insurance consultancy, has delivered its pension predictions ahead of the Spring Statement on March 6th 2024.

David Brooks, Head of Policy at Broadstone, expects a quiet fiscal event for the pensions sector with various reforms either in process of implementation or in the consultation process.

Moreover, with a General Election expected at the tail-end of the year he predicts the Chancellor will direct efforts and money towards more retail-friendly offerings such as cuts to Inheritance Tax or personal taxation.

Existing reforms bedding in or in consultation

David Brooks said: “The Autumn Budget confirmed that the Lifetime Allowance would be abolished on 6 April 2024 – a tax cut made at break-neck speed which could risk poor outcomes given the complexity of the legislation.

“The Mansion House reforms are still going through the legislative process and we do not expect a response to the ‘pot-for-life’ proposals by the time of the Spring Statement.”

Voter-friendly tax cuts expected

David Brooks said: “With a General Election looming and the Conservatives needing to make up a hefty deficit in the opinion polls, we expect the Chancellor to use the Spring Statement to introduce further tax cuts following on from the Autumn Budget.

“It may be his last attempt to curry favour with the electorate – notwithstanding a late Winter election – and so any combination of Inheritance Tax, income tax and National Insurance are expected to be in the crosshairs.”

Stimulating saving

David Brooks said: “Alongside tax cuts, Jeremy Hunt may look at other tax-free vehicles to create a nation of savers. There were scotched rumours ahead of the Budget that the annual tax-free allowances may be lifted for LISAs and ISAs. The allowances may be looked at again, while the Chancellor could also increase the value of property that can be purchased using a LISA from its current £450,000 limit.”

Any rabbits left in the hat?

David Brooks said: “We’d expect the government to double down on its support for the State Pension triple lock given the importance of retirees to the Conservatives’ electoral fortunes.”

“Frozen thresholds acting as an onerous stealth tax via fiscal drag have been a lightning rod for critics of the government – unfreezing them would be a popular move.”

Pensions policy in the spotlight

David Brooks said: “The Times has launched a campaign to improve pension adequacy and the Resolution Foundation propose the ability to access pensions early. The potential for a change in government sometime in the next 12 months appears to be focussing minds on future pensions policy.

“If the polls are to be believed, this government has a finite time to make significant policy developments before passing the baton to a different party. Initiatives, such as Pensions Dashboard, need to make significant progress before the end of March to ensure the project remains on track.”

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