The Chancellor Jeremy Hunt is cutting Class 1 national insurance from 12% to 10% from January as improvements in the public finances have supposedly given the Chancellor some financial headroom for last week's Autumn Statement.
A smaller 1% cut in Class 4 follows in April 2024.
Times’ Money Mentor considers the NI changes here - How will national insurance changes affect me?
But elsewhere coverage suggests that due to bothersome details such as the continued threshold freeze, the tax burden will continue to rise. Such headlines may not please the Government as it seeks an argument to vote Conservative in the forthcoming general election.
The regulatory details that will really interest the adviser sector will surely be more information concerning LTA abolition which came out on the day of the statement. Citywire looks at things in some detail here, though it adds that not all the questions have been cleared up yet.
The FCA has launched a 'pension pot-for-life' consultation which would bring the individual further into pension decisions in a bid, among other things, to resolve the issues of small pots as Corporate Adviser reports.
This is, likely, the most significant initiative of the range of pension reforms ‘launched’ in the summer and now boosted again by the Chancellor as the previously unheralded ‘pensions section’ of the Autumn Statement.
There is a lot of analysis of the initiative from - loosely - three camps – supporters, opponents and in-betweeners.
So here is, for example, Pensions Bee research, which suggests the majority of savers will embrace this new world of the individual in pensions decision making, as reported by Money Marketing.
It quotes PensionBee director of public affairs Becky O’Connor saying: “Our research suggests this could be met with strong support from workers. Careers are becoming more complicated. People can have several jobs throughout their lifetime, or go self-employed for a time and then go back to employment. They might consolidate old pensions, then continue to build new ones through subsequent work and want to have these contributions paid into their personal pension, but may find their employer might not yet allow it. This simple change could give those who want to build their own pension and have the convenience of having an employer pay straight into it the opportunity to do so.”
Contrast this with Royal London’s Jamie Jenkins quoted in Employee Benefits.
“Automatic-enrolment into workplace pensions has been a huge success story and the relationship between employers and their employees is pivotal to this. A pot-for-life model would significantly undermine this dynamic by requiring employers to navigate an increasingly complex array of payments to different providers. If we really want to engage future generations in their retirement savings and address the proliferation of small pension pots, we should focus on a digital solution by delivering a fully functional pensions dashboard.”
We are also beginning to see concerns voiced from what might be called the broader workplace pension sector over potential confusion.
Capital Cranfield professional trustee Andrew Cheseldine said: “Is it for all schemes – what happens if you have people who want relief at source in a net pay scheme, and vice versa? Employers will move from dealing with one provider to up to 12. I think the burden on the regulator would increase ten-fold. How are they going to check contributions are correct on multiple schemes? And what will this approach do to opt-out rates?”
What is missing is much consideration about what it might mean for financial advisers though SJP suggests pot for life may be used more by advised clients as reported in Money Marketing.
It could bring more adviser influence on some workplace pension decisions but any vehicle receiving contributions will be price capped of course. It will be interesting to see how things play out in reality.