I’m old enough to remember when you knew nothing about what the chancellor was going to say in the Budget until he actually stood up to deliver it.
When I was asked to write this, I joked that I could have written it in the morning before the Jeremy Hunt even stood up, so much had been leaked in the past few days we felt we knew pretty well the key points already.
Then he dropped the bombshell of scrapping the lifetime allowance altogether. We didn’t see that one coming.
But what impact will it actually have? As a former health minister Hunt is probably more aware than most in government of the impact the LTA was having on doctors in the NHS, with many supposedly choosing to retire rather than face punitive charges of their excess pensions.
Personally, I’m not so sure that is the only reason they are leaving the NHS. It might be the final thing that pushes them over the edge but I think they have a general desire to leave and retire anyway.
I saw client only yesterday and their 48-year-old GP daughter-in-law fully intends to retire at 55 because, frankly, she has had enough. She should also have ‘enough’ to enable her to do that.
It’s the same with increasing the money purchase annual allowance to try and tempt those who have already left work and accessed their pensions back into the workplace with the promise that they can now pay a bit more back into their pension.
If you have reached that point where you want to stop work, or you already have, and you can afford to do it, then being able to put a bit more in your pension without facing a tax charge probably isn’t going to change your mind.
Ironically, increasing the annual allowance may actually help people retire earlier as some will be able to pay even more into pensions and get to that magic point where they no longer need to work and can retire even sooner.
One thing that may actually help is the change to childcare. Younger people may now be able to afford to go back to work sooner after having children. It may also impact some older workers who now won’t leave the workplace to become the carer for their grandchildren and allow their sons and daughters to go back to work.
Personally, I will have a busy few days contacting clients who may now want to make a pension contribution this tax year when they wouldn’t have before; then I will be onto to those who will want to increase payments to maximise their annual allowance next tax year and discussing how that may affect their financial plans.
Good luck to you all with that.
