Anyone who is involved in the world of workplace savings will recognise that the last few months have been rather interesting to say the least.
At the start of the year both employers and the pensions industry were braced for major changes to UK pension tax reliefs in the March Budget. Yet shortly before the appointed day the Chancellor announced that no such alteration would be made. The reasons behind this decision are still not fully understood, although it seems likely that the decision was shelved until the dust had settled on the (at that time approaching) EU referendum.
Yet this was only part of the story. Pension changes were indeed avoided, yet Mr Osborne took the opportunity to instead introduce a new savings option in the form of the Lifetime Individual Savings Account (LISA). For those as yet unfamiliar with this new concept/product, please see this summary from the government website. LISA is due to commence in April 2017.
And this week the government introduced the Savings (Government Contributions) Bill including some of the proposals for LISA (and indeed another Budget savings initiative, the Help to Save scheme). So it seems clear that despite the change in government personnel – and of course the EU referendum result – both initiatives are still set to proceed.
It is therefore increasingly likely that Lifetime ISA will indeed be available to savers soon. At present we remain some way from the final details of the offering, and it is not yet clear whether LISA will (or indeed can) fit within employer sponsored benefit offerings. We will comment on this again nearer the time of launch, and will doubtless also provide our followers with comparisons of LISA against pension savings.
It is however already clear that these new government supported options will add yet further layers of complexity to the world of workplace savings, and as such we would encourage employers to include updates on this topic within their financial education programmes for 2017. For more information on our services in this area please speak to your usual Jelf consultant.
Finally, and not least, it is worth highlighting that the drivers that nearly led to changes within the pensions tax relief system remain present. It would therefore not be unexpected if this issue were once again on the radar come the autumn Budget statement. Again, please speak to your usual Jelf consultant for more details on this issue.
As ever, we will keep you posted on all of the above here on the blog and at our ever popular Jelf Employment Seminars.