As the country and pensions industry prepares for the Budget on Wednesday, Pensions Age looks back at the top policy announcements from Budgets over the past few years, from the announcement of the pension freedoms in 2014, to the most recent confirmation of a cut to the Money Purchase Annual Allowance.

Spring Budget 2017

The headline announcement from the final Spring Budget, following the Chancellor’s decision to move the Budget to the autumn and create a spring statement, was that pensions had been largely left untouched. It was welcome news for the pensions industry, given a chorus of voices ask to be left alone twice a year when the Chancellor brings his red box to parliament.

There was rumours Philip Hammond would put pensions tax relief back on the agenda, but instead his only announcement in relation to tax relief was to confirm the cut to the Money Purchase Annual Allowance (MPAA). Many in the industry had hoped that the Treasury would review its decision to reduce the MPAA from £10,000 to £4,000 following an industry consultation.

In addition, the government announced its plans to amend the tax registration process for master trust pension schemes to align with The Pensions Regulator’s new authorisation and supervision regime.

Autumn Statement 2016

It was in the Autumn Statement of 2016 when the government originally mooted the idea of a cut in the MPAA to £4,000. For his first Statement, it wasn’t a popular move from Hammond for the pensions industry.

However, he also used the Autumn Statement to announce a consultation on a pensions cold calling ban, following industry pressure to tackle scams. “We will consult on how to ban pensions cold calling and a wider range of pension scams,” Hammond said at the time.

The plans, which are still yet to be legislated for, propose that all calls where a business has no existing relationship with the individual will be forbidden. This includes scammers targeting people who inadvertently ‘opt-in’ to receiving third party communications.

Hammond also revealed plans to change the tax treatment of foreign pensions to be more closely aligned with the UK’s domestic pension tax regime.

Spring Budget 2016

Although George Osborne didn’t know it at the time, the Spring Budget of 2016 was to be his last Budget as Chancellor, with the Brexit result changing the trajectory of the government and the country.

He used the speech to launch the Lifetime ISA for young savers, which people in the industry said threatened the future of traditional pension saving. Osborne revealed that from April 2017, anyone under 40 would be able to open a Lifetime ISA, meaning for every £4,000 saved the government will add £1,000 every year until the age of 50. The Chancellor said he wants to help the next generation build up assets and save, as many do not have pensions because they are "too complex”.

Osborne also pledged to rise public sector pension contributions as part of the Budget. The Chancellor said the government wants to keep public sector pensions sustainable. However, he stressed that this wouldn’t affect the pay out of anyone’s pensions. Osborne claimed the last reforms made to public sector pension schemes will save the government over £400bn in the long term.

Autumn Statement 2015

The main headline from the 2015 Autumn Statement was a ‘hint’ of a delay to auto-enrolment contribution increases, as it revealed they would be phased to be in line with tax years.

Osborne also announced a state pension increase of £3.35 a week, bringing the total weekly income to £119.30 from £115.95 in line with earnings – the biggest rise for 15 years. The new state pension set to be introduced in April 2016 is will be set at £155.65 a week.

Summer Budget 2015

Following the election result, which put the Conservatives back in power, this time with a majority, the former Chancellor announced he was launching a green paper on treating pensions taxation the same as ISAs. Delivering the Budget in the House of Commons, Osborne said he was “open to further radical change”.

“Pensions could be treated like ISAs, you pay in from taxed income and it's tax free when you take it out and in between it receives a top up from the government. This idea and others like it need careful and public consideration before we take any steps so I am today publishing a green paper that asks questions invites views and takes care not to pre-judge the answer,” he added.

The Chancellor also confirmed the government would reduce the 45 per cent tax rate that applies on lump sums paid from the pension of someone who dies aged 75 and over to the marginal rate of the recipient from 2016-17.

Spring Budget 2015

In the Spring Budget the Chancellor announced a policy, which in the end, never materialised; the creation of the secondary annuities market. There were plans to allow people to be able to sell the annuities they had already purchased, in order to get a lump sum, a way of the government extending the pension freedoms.

Despite the Financial Conduct Authority undertaking a consultation on the creation of the market, there was mixed support from the industry, and eventually after delays, the plan was scrapped in October 2016.

In the same Budget government also announced the lifetime allowance would go down from £1.25m to £1m from April 2016.

Furthermore, Osborne revealed that all widows, widowers and civil partners of police officers and firefighters who are killed on duty will no longer lose their survivor benefits if they marry, cohabit, or form a civil partnership.

Autumn Statement 2014

In the Autumn Statement of 2014 the government confirmed the 55 per cent pensions death tax will be abolished and will ensure that people who die before the age of 75 with a joint life or guaranteed term annuity can pass that on tax free too.

If the person is 75 or over, beneficiaries will only pay their marginal tax-rate when they draw down their income, as they would with any pension. If the person who dies is under 75 there will be no tax to pay at all.

Spring Budget 2014

The Budget when Osborne ‘dropped the mic’ just as he was wrapping up his speech. It was this Budget that the government revealed the freedom and choice pension reforms, bringing about huge change in the pensions industry.

Osborne announced the requirement to purchase an annuity would be lifted from April 2015, and DC savers would be able to draw their pensions from age 55 by drawing it as a lump sum or using an income drawdown arrangement regardless of the size of their pot.

In additon, he revealed people aged 55 and over will only pay their marginal rate of income tax on anything they withdraw from their DC pension above the 25 per cent tax free pension commencement sum – either 0 per cent, 20 per cent, 40 per cent or 45 per cent.

As a “first step” in introducing the reform, a number of taxation changes will take effect from 27 March. The amount of guaranteed income people need in retirement to access their savings flexibly will be cut from £20,000 to £12,000. Total pension savings that can be taken as a lump sum will be increased from £18,000 to £30,000.

Capped drawdown withdrawal limits change from 120 per cent to 150 per cent of an equivalent annuity, and the maximum size of small pots which can be taken as a lump sum will be increased from £2,000 to £10,000. The number of personal pots that can be taken under these rules from increases from two to three.

Announcing the changes, Osborne said the reform was “the most far reaching reform to the taxation of pensions since the regime was introduced in 1921”.

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