Tom McPhail, Head of Pensions Research at Hargreaves Lansdown gives his predictions, ahead of the Chancellor's Autumn statement, Wednesday 3rd December.
We don’t think there is now time left for any major legislative initiative, just because we are so close to the end of this parliament and the General Election. It would be very tight in terms of parliamentary time to try and squeeze anything new in, particularly with the Scottish question still to be addressed in the New Year. Nevertheless, after the extraordinary pensions announcement in the Budget back in March, we’re not taking anything for granted.
Pensions. The Treasury has released some information regarding the expected outcomes of the new pension access freedoms, including a projection of an extra 3,000 Defined Benefit scheme members seeking advice on transferring to DC pensions. Based on our experience at Hargreaves Lansdown, this looks like a significant underestimate; we have already seen around an 80 percent increase in requests for Defined Benefit to Defined Contribution transfer analyses.
We’re expecting to get some more impact assessment analysis from the Treasury; possibly we’ll also get some new information regarding the Government’s free retirement guidance and its plans for the retirement income market post-2015. Steve Webb was hinting at the weekend at more regulations to come. Pension Tax relief is unlikely to be revised at this stage, just because there is so much going on already. Trying to wedge through another seismic change this side of the election would probably be impossible. According to the announcement posted on the HMRC website: “The Chancellor's annual Autumn Statement including any plans affecting Stamp Taxes will be published on 3 December 2014.” Is this regular protocol or perhaps a hint of some announcement to come?
National Savings & Investments Income Bonds
We should get the confirmed details of the interest rates which will be offered on the new NS&I Income Bonds for the over 65s which go on sale in January. Investments of between £500 and £10,000 can be made in each 1 year or 3 year bond. The interest rates proposed in the Budget were market beating, 2.8 percent for the 1 year and 4 percent for the 3 year.
Personal Allowance/ Tax thresholds
It would still be possible for the Chancellor to announce some last minute revision to the personal allowance or the tax thresholds, to take effect just a month before the general election.
Enterprise investment
We know the No.10 policy unit has been looking for new ways to stimulate investment in start-ups and micro-employers. The current VCT market tends to favour second phase businesses which have already established themselves and started to show returns to investors. A tax break to stimulate investment into new businesses, or perhaps to stimulate employee share ownership could be a strong political card to play.
OBR update
The Office for Budgetary Responsibility will publish its latest economic forecasts alongside the Autumn statement. Any significant revisions to performance data or projections could have knock-on implications for monetary or fiscal expectations.
Sovereign Wealth fund
George Osborne and others close to the heart of Government such as Matthew Hancock and Lord Deighton have spoken recently of the possibility of a shale gas funded Sovereign Wealth Fund. What better time to unveil more details than 6 months before a General Election?
