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Autumn Statement; pensions escape unscathed

After a revolutionary year for the pensions industry, Chancellor George Osborne chose not to use his Autumn Statement to announce any further game-changing measures to the pension industry and this decision was warmly welcomed. 
Good news came in the form of a rise in the basic state pension next year by £3.35, increasing the weekly pension income to £119.30. This increase in the new state pension and basic state pension is a welcomed move, and recognises in a small way the financial struggles of many elderly people, however it was not a surprise announcement. The rise met the government’s “triple lock” pension promise, which guarantees to increase pension income by whichever is the highest of wage growth, inflation or 2.5%. With wage growth running at 2.9%, the Chancellor says the latest rise takes the state pension to its highest share of average earnings for 25 years*.
George Osborne also made an unexpected announcement to delay auto-enrolment contribution (the work based pension saving scheme) to align it with the tax year. Unfortunately this decision could cause some issues for employers, business advisers and providers, especially considering that auto-enrolment was announced well over 5 years ago and many schemes are already in place.
Whilst well intended, this move will mean that affected employers will now need to hold discussions with their staff to ensure that they keep them fully abreast of the new changes. On top of this, many companies will have already made their financial plans for the year ahead, taking into account the changes that were due to happen in October 2017, now delayed until April 2018. Some employers will be frustrated that their original plans may have to be revisited.
The Autumn Statement brought some good news for current pensioners with a small rise in income; however future generations cannot draw comfort from this and rest on their laurels. The state pension cannot be considered as a standalone saving option, particularly in light of the delay of auto-enrolment. A welcome addition would be for the Government to take further steps to support people saving for their retirement, and not just to support pensioners.
To read Sanlam’s full review of the Autumn Statement, please click on this link.
If you would like to find out how the recent changes may affect you, please get in touch, we’d love to help. 


Date issued: 26.11.15

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Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.