This change sends the wrong message and makes a simple issue complex. If the double tax relief issue really costs so much maybe the government should abolish the MPAA altogether and encourage people to pay into other arrangements that do not offer upfront tax relief.
Back to the Autumn Statement and the other pension announcements.
The consultation on banning pension scams was well trailed before the Autumn Statement and it was a slight surprise that the consultation was not published on the day. The proposals also include firms having greater powers to block suspicious transfers and making it harder for scammers to abuse Ssases. This all sounds sensible, but we need to see the detail before a full assessment can be made.
Tax treatment of foreign pensions is to be more closely aligned with the UK domestic pension regime. An area to note will be the effect on Qrops.
Triple lock
The triple lock on state pension is staying – at least until the end of this parliament (2020). This issue will not go away and it is clear that it will be reviewed in the next parliament. The fact is, it is expensive and biased towards older people, at a time when younger people are struggling to buy a house, let alone think about retirement savings.
One proposal that was announced at the last Budget and still remains on track is the plan to reform salary sacrifice. More of a watching brief at the moment as currently pensions have an exemption from the changes - as do childcare, cycle to work schemes and ultra-low emission cars. While pensions are currently exempt, I would not bet on that remaining the case for too long.
Any arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.
And finally, we still have the tapered annual allowance rules – why? Wait until this time next year when the pain of paying the tax bills has been clear – then perhaps the Chancellor will wish he had listened.
Mike Morrison is head of platform technical at AJ Bell
Key points
The chancellor is proposing to reduce the money purchase annual allowance to £4,000 from 6 April 2017.
The consultation on banning pension scams was well trailed before the Autumn Statement.
Currently pensions have an exemption from the changes, but that might not be the case for too long.
