The pension policy changes announced in the chancellor’s Spring Budget this year are driving advisers to adjust their advice.
In a survey conducted by Fidelity Adviser Solutions, 70% of independent financial advisers said the changes will have an impact on the advice they give to clients.
The changes announced include the removal of the lifetime allowance (LTA) charge and an increase in the annual, tapered and money purchase annual allowances (MPAA).
Around 84% of advisers in Fidelity’s survey said the reduction in the capital gains tax allowance (CGT) will have the most significant impact.
This is after changes to the CGT annual exemption came into effect in April 2023, having been halved from £12,300 to £6,000. The annual allowance is set to reduce further to £3,000 in April 2024.
The removal of the LTA charges and increase of the annual pension allowance limit from £40,000 to £60,000 will also influence the advice provide to clients, Fidelity found.
Meanwhile, the reduction of the additional-rate income tax threshold from £150,000 to £125,140 is expected to have less of an impact on client advice (54%).
Fidelity Adviser Solutions head Jackie Boylan said the budget included some of the most significant changes to pensions policy seen in recent years, presenting many savers with an opportunity to reassess their retirement plans.
“With so many developments to navigate, advisers have a pivotal role to play in helping them to understand how to maximise their allowances and prepare for the future,” she added.
From April 2023, the total amount that workers can accumulate in their pension savings before paying extra tax increased as the changes announced at the budget came into effect.
The surprise removal of the LTA charge had an immediate impact with clients looking to make the most out of their retirement options.
Around 43% of advisers report clients increasing pension contributions since the spring budget and 58% anticipate clients increasing contributions in the future.
With the date of the Autumn Statement now set for 22 November, Boylan said there may be “further developments to prepare for on the horizon” – all against a challenging economic backdrop and general election next year.
“When it comes to wider pensions and savings policy – with the automatic enrolment extension bill recently receiving royal assent after clearing parliament – pending changes will likely be significant,” she added.
“Questions will continue to be asked about the future of the triple lock and the Pensions Bill – and we expect to know more following the King’s Speech at the state opening of parliament in early November.
“Clients will rely upon advisers to help them navigate through possible changes and keep their own retirement goals in sight.”
