What pension changes were announced during the Autumn Statement?

Considering the wide-ranging pension changes revealed during the Chancellor’s Budget announcement back in March, there was precious little saved up for his Autumn Statement at the start of December. Though pensions and personal savings did again feature, there was nothing like the same level of focus as earlier in the year. With an election due in May 2015, George Osborne is perhaps saving any bigger announcements until closer to that date; he does, after all, have another Budget statement to deliver in March of that year.

Until that time though there were some smaller scale policies to reveal and previously announced commitments to put on record. In the latter category, the Chancellor was keen to draw attention to the cutting of the 55% pension ‘death tax’, making it much easier for pension holders to plan for leaving an inheritance. The policy had been announced as long ago as September, but Mr Osborne used the Autumn Statement to crystallise it. The change means that individuals will be able to pass on defined contribution pension savings tax free (if they die before age 75), or at either their marginal rate of tax (if the individual passes away after the age of 75) or at 45% (if the funds are taken as a lump sum).

Having bolstered pensions and been rather critical of annuities during recent policy announcements, the Chancellor did this time also provide a boost for current holders, extending the death tax cut to joint life and guaranteed term annuities. Again, you will only be able to pass them on tax free if you die before the age of 75.

In terms of specific pension announcements, that was about all he wrote for this year, though there were a series of policies in other areas that are likely to affect wider financial planning in later life. The new ‘pensioners bonds’ for example, only available to those over-65 and at market-leading rates, had again been trailed during the Budget, but were here announced for introduction this month. Just this week in fact, the rates on the new bonds have been announced: 2.8% for the one-year and 4% for the three-year bond, before tax.

Further changes were also announced for ISAs, after the large scale alterations in the Budget that saw the introduction of ‘New ISAs’ (the ‘new’ seems to have already been dropped). As of April 2015 there will be a new savings limit of £15,240 per year (up from £15,000) and new rules about transferring your ISA benefits to a spouse or partner become effective immediately, again potentially providing a bonus for those looking at savings and tax planning.

Overall though it was a quiet Autumn Statement for pensions, with other areas, such as Stamp Duty, taking the headlines this time. With his party typically aiming at older voters though, don’t be surprised if Mr Osborne has pension policies in abundance when he stands for his Budget speech in March next year.

You can request a call back by completing the form below, if you would like to speak to us directly about what pension changes were announced during the Autumn Statement.