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Autumn 2021 Budget – Pensions

The Chancellor of the Exchequer, Rishi Sunak, has now delivered the Autumn Budget and Spending Review.

The Chancellor stated

"Employment is up. Investment is growing. Public services are improving. The public finances are stabilising. And wages are rising. Today’s Budget delivers a stronger economy for the British people"

It seems Mr. Sunak has largely avoided tinkering with pensions to fund his spending plans, however last week we talked about the recent CPI announcement of 3.1% and that the dropping of the triple lock would likely mean this would be the rate of rise for those in receipt of a state pension. The Chancellor confirmed this today and the state pension will indeed rise by 3.1% in the 2022-23 tax year, equating to an annual boost of £289 for some pensioners.

And Armed Forces Pensions?

We noticed that a technical tax update was slipped in, and from our first review, this appears to simply facilitate many of the changes anticipated in the McCloud review. Perhaps the only new feature is the facility allowing an individual to protect their pension rights from lifetime allowance charges calculated on the higher of the two pension choices available to them. Clearly we will have to see how this plays out when the McCloud choices are made available, meanwhile you can read the paper at the link below:

Policy Paper - Taxation of Public Service Pensions Reform Remedy

The other point of interest for our serving members is the abolition of the public sector pay freeze. Apart from the welcome news that those serving can again hope for pay rises, it also reduces the prospect of a recurrence of the pensions trough (which occurs when those that leave service enjoy superior pensions than those that remain in work simply because CPI continues to improve pensions by more than a pay freeze).

You can find the Budget in full with supporting and related documents here.

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