Chancellor of the Exchequer Rishi Sunak has announced a variety of economic measures today as part of his Autumn Budget. He has delivered £150billion of extra commitments and stoked speculation of an early General Election. Although the Chancellor stressed his “goal” was to cut taxes by the end of the Parliament, the Office of Budget Responsibility forecasts showed tax as a share of GDP hitting 36.2 percent – the highest since 1951. Spending also jumps by £22.9billion a year by 2026-7, following a £25billion boost to departmental budgets as the Chancellor appears to be moving towards Prime Minister Boris Johnson’s vision of higher spending.
On taxation, business rates will be reformed to support companies and Mr Sunak confirmed that the bank surcharge will be cut from 8 percent to 3 percent.
This Budget was light on personal finance changes, however, but the Government has already frozen tax thresholds on wealth taxes, income and the pension lifetime allowance.
Mr Sunak is coming under scrutiny for another Government plan which has been in the works long before this week’s Budget.
The Government has signalled its intention to increase the minimum age at which savers can access their pension from 55 to 57.
From 2028, savers will have to wait an additional two years before they can dip into retirement savings without triggering punitive tax bills.
But the plan has come under fire from various experts and the pension industry as a whole.
Analyst at AJ Bell, Tom Selby’ lamented the proposal as “dangerous” and “worrying”.
He added in his interview with the Telegraph: “The Treasury has taken what should have been a simple reform and turned it into a hot mess of complexity. It is not too late to avoid this madness and we strongly urge the Treasury to step back from the brink.”
Helen Morrissey of Hargreaves Lansdown, the stockbroker, warned this could cause a wave of pension transfers.
She added: “Millions would still be able to access their pension at age 55, and most savers would have multiple pension pots, each with a different minimum pension age. It would be a lottery depending on your provider.
People are more likely to transfer even if it’s not the right thing for them.
Ms Morrissey also said that the changes could make savers for vulnerable to scammers.
She continued: “Wherever there is confusion, scammers come out of the woodwork. They sniff out opportunities and react very quickly. This would be a massive opportunity for scammers to say they can help with a pension transfer to somewhere with a protected retirement age.”
She said: “People are living and working for longer so it is right the minimum age you can access your pension will rise to 57 in seven years’ time, in step with the state pension age rising to 67.
“Unfortunately, the government’s proposed implementation maximises the complexity of this change and would create enormous confusion for pension savers.
“We urge the government to rethink their approach and make it much simpler for consumers.
“Being able to access their pension at 57 from 2028 for the vast majority of people is clear, reduces complexity and poor outcomes, and simplifies planning for retirement.”