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Eversheds comment: Budget 2016 - radical pensions moves materialise after all

  • United Kingdom

    16-03-2016

    Commenting on pensions measures announced in today's Budget, Francois Barker, head of pensions at Eversheds, says:

    “The launch of a new retirement savings vehicle for under 40s – the Lifetime ISA – was noteworthy for a Budget that was not supposed to contain any radical pensions reform. While this launch stopped short of turning the system of pensions tax relief on its head, it leaves the door open to a more wholesale reform of pensions tax relief in the future.

    "It is unclear how the new Lifetime ISA will impact on pension saving and, in particular, auto-enrolment. There is a risk that it could encourage under 40s to opt-out of auto-enrolment schemes. Whilst this might be good for tax receipts it could undermine the success of auto-enrolment and it would also mean that individuals miss out on their employer’s pension contribution.

    "In addition, the 5% exit charge for early access looks steep, particularly in light of the recent clampdown on exit charges from pension schemes.”

     

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