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|Later Life Academy pre-Budget thoughts|
|Tuesday, 15 March 2016|
Bob Champion, Chairman of the Later Life Academy, said: “Yesterday’s Financial Advice Market Report opened the door for a review of the tax exemption that applies where the employer provides financial advice through the workplace and for individuals to withdraw a small amount of their pension savings before retirement to pay for such advice. Further announcements in these areas tomorrow would certainly be welcome in order to show the Government is serious about helping to close the advice gap.
“The Government do however have a serious problem with the sustainability of the current pension tax system. Despite numerous changes since the financial crisis all they are doing is slowing the growth in cost. With increasing participation in the system, and the ratcheting up of minimum contributions under auto-enrolment, the costs can only continue to increase. I would therefore expect to see further restrictions around the edges, for example, further restrictions to the annual allowance and changes to National Insurance Contributions to reduce opportunities for salary sacrifice. This continued tinkering is not good for the future of retirement savings but unfortunately it looks like we are going to be denied the opportunity for an inclusive debate around what a sustainable pension regime should look like.
“If there are any restrictions announced around what can be saved in pensions then this should be matched by a corresponding uplift in ISA subscription limits. To enable the majority to experience a meaningful retirement a culture of putting money aside for later life needs to seen to be fostered by the Government
“Finally, care provision and funding are under great strain at present, therefore it would be a major step forward to hear proposals which can help ease the stress incurred by those who need care and their families. In that sense, perhaps some assistance could be provided for self funders by enabling pension income to be paid direct to care providers tax free.”
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