Pension Budget changes in FULL – what Rishi Sunak’s announcement means for you
Budget 2021: Sunak reveals changes to pension charge caps
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The UK has witnessed spectacular upheaval of pensions policy throughout the coronavirus pandemic, including the pause on the flagship Triple Lock policy which has left pensioners worse off. Individuals have been expecting to hear what’s in store for their savings in the Budget this afternoon.
In September, the Government confirmed it would freeze the Triple Lock – which guarantees the state pension will increase by the highest of inflation, average earnings growth, or 2.5 percent.
The Government put a hold on the lock when earnings grew after many people returned from furlough.
What did the Chancellor announce about pensions today?
The Chancellor did not make any announcements regarding the Triple Lock today, however did make other changes to pensions.
He said the Government will consult on changes to the regulatory charge cap for pension schemes, in a bid to allow more institutional investment.
Money Expert Martin Lewis said on Twitter: “Slightly concerned about glib ‘regulatory unlock for pension charge cap’ i.e., increasing the charges cap so funds can charge more.
“This can be positive, as it allows a wider choice, but must not be allowed to push up the norm for charges for simple funds.”
Former Pensions Minister, Sir Steve Webb tweeted: “Relaxing pension charge cap to encourage illiquid investments is really missing the point – most schemes are well below the charge cap and barriers to investment are not primarily about charges.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “We welcome the consultation on reform of the DC charge cap announced in today’s Budget. While introduced to safeguard value for scheme members we know that cost is only one determinant of value.
“There will be appetite to invest in more illiquid assets, especially if it aligns with people’s values of a greener future and this would prove difficult with the charge cap in its current form.
“We await the full detail, but it will be interesting to see if this may also read across to charges on drawdown investment pathways.”
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