Beth Joslyn: Why we need a patient Chancellor

Last year, a whirlwind of change hit the pensions industry as schemes and advisers raced to prepare for the removal of the lifetime allowance, while HMRC staff scratched their heads over exactly how it could be done before the end of tax year deadline, writes Beth Joslyn, of AJ Bell (standing in for Lisa Webster who is on holiday). Although the changes made it across the line, more work is still needed to fully deliver the last government’s vision. We continue waiting for the long-promised amending regulations intended to fix a host of drafting errors which have left many clients in limbo unable to fully access their pensions. Progress is being made, albeit slower than we’d all like. Over the summer HMRC held a short consultation on drafts of the regulations. This is good news, and it should not be understated what an enormous task this has been for HMRC. Crucially, though, we still don’t know exactly when these regulations will be passed. HMRC said in their August newsletter it would be, “as soon as the parliamentary timetable permits after the summer recess”, but with another recess starting for party conference season we’ll likely find ourselves waiting until later in the Autumn at the earliest. The Autumn also brings with it the new Chancellor’s first Budget, and rumours around pensions are swirling once again. Clients will always want to try to pre-empt any changes that could impact them, and with last year’s rules still not finalised there is even greater uncertainty around pensions than usual. One rumour causing some clients worry is the possibility the Chancellor may want to reduce the maximum amount of tax-free cash which can be taken. Currently this is set at £268,275 unless the client holds a form of transitional protection. Freezes to the lifetime allowance kept it at this level since 2020/21, and it is now baked into legislation as the lump sum allowance. Reducing it would be a deeply unpopular move, but the government has been clear we’re in for a “painful” Budget, and with so many other avenues for raising funds already ruled out – income tax, national insurance, VAT, corporation tax – it’s easy to see how pensions could be targeted. Yet after so much upheaval, I hope the Chancellor instead opts to allow for the dust to settle and give time for the new rules to be embedded properly before making any further changes to private pensions. Retirement planning is a long-term game and repeatedly tearing up the rule book only serves to undermine confidence in the system and reduce incentive to save and invest. Beth Joslyn is Beth Joslyn, senior technical consultant at AJ Bell. She studied Ancient History at Swansea University and worked in financial services for several years before joining AJ Bell in 2013. Since moving into a technical role in 2019, Beth is responsible for analysing new legislation and regulations and providing technical support to the business, as well as creating and delivering technical training to staff. Lisa Webster is senior technical consultant at AJ Bell and is currently on leave, returning next month. She is an economics graduate with over 15 years’ experience in financial services. Prior to joining AJ Bell in May 2014 she spent nine years working in senior technical and consultancy roles at a major SIPP and SSAS provider. She is part of the AJ Bell Technical Team. Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Twitter: @lisasippster

Beth Joslyn: Why we need a patient Chancellor

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