Nucleus: Advisers and clients in limbo as questions surround pensions legislation
Reacting to the results of the General Election, Rachel Vahey, product technical manager at Nucleus Financial comments that any coalition will hinder the legislative process, leaving advisers and clients in limbo.
‘After a tumultuous election, the UK political scene appears less than stable. Although a Conservative / DUP coalition appears on first glance to be the most the likely outcome, any coalition will be built on fragile ground, and will undoubtedly slow down and even roadblock the legislative process.
‘With it being cut from the latest Finance Act, there is now the question whether the reductions in the money purchase annual allowance (MPAA) and the tax-free dividend allowance will make it into law this year. This places advisers and their clients in limbo, trying to work out how much the MPAA is for 2017/18 tax year – £10,000 or £4,000. But the longer this hiatus lasts, the less likely it seems that the government can backdate this piece of legislation to the start of the tax year when – or if – it is eventually passed.
‘After kicking the Cridland Review of state pension age into the long grass, in the run-up to the election, it will prove very difficult for the new government to pick up this particular change. Labour will no doubt oppose any increases to state pension age – in their manifesto they favoured freezing it at 66 – and so we can expect no new proposals.
‘Pensions tax relief is another area which is likely to be consigned to the backburner. A proposed big ticket switch to, say, a single rate of tax relief will probably not get the parliament time or focus. But this still gives the new government wriggle room for more tinkering, and changes to the lifetime allowance or annual allowances cannot yet be ruled out.’