Industry experts have broadly welcomed the omission of any "drastic" pension tax changes in the Autumn Budget, although there are concerns that this could have been a “missed opportunity” for some broader areas of reform.

During her Autumn Budget, Chancellor, Rachel Reeves, announced plans to bring pensions into scope of inheritance tax from 2027, as well as plans to increase employer National Insurance contributions.

However, despite speculation ahead of the Budget, the government held off on broader pension tax changes, such as cutting the tax-free lump sum or applying national insurance on employer's pension contributions.

This has been met with relief by the pensions industry, as Pensions Management Institute (PMI) director of policy and external affairs, Tim Middleton, said: "We are both relieved and delighted that even in such difficult economic circumstances the importance of our workplace pension system has been recognised and respected”.

This was echoed by Pensions and Lifetime Savings Association (PLSA) chief policy counsel, Nigel Peaple, who said: “Contrary to the many rumours that the Budget would undermine pension saving by reducing or removing fiscal support to pensions in general, we were very pleased to see that this did not take place.

"Most people in the UK need to save more, not less, into a pension to have a good retirement income.

“We welcome the focus in this Budget on investment, in particular, the change to the fiscal rules to support public investment and the promise of policy certainty provided by a long-term modern industrial strategy."

Aptia UK president, Malcolm Reynolds, also said that while there was a sense that earlier this year the Chancellor may have had pensions in her cross hairs, it is "encouraging" that she has clearly listened to industry and not made knee-jerk changes.

And this lack of broader changes, according to Aon partner and head of UK retirement policy, Matthew Arends, is expected to offer more certainty going forward, helping employers and employees to plan.

But not all have welcomed the lack of broader pension tax changes, as TPT Retirement Solutions chief executive, David Lane, argued that the Chancellor “missed the opportunity” to increase pension tax relief to lower-rate taxpayers in this Budget.

“This would have made the system more progressive and made a significant difference in helping some lower earners save for retirement," he stated.

"This Budget was also a missed opportunity to cut the age of auto-enrolment into a pension scheme to 18 and remove the lower earnings limit to help younger and lower-paid workers save more.

"We hope these measures will instead be considered in the second phase of the government’s Pensions Review expected next year.”

People’s Partnership, provider of The People’s Pension, chief executive officer, Patrick Heath-Lay, shared these concerns, arguing that auto-enrolment reforms should be considered as soon as possible.

“Increasing the minimum wage for younger workers means that the current age threshold for automatic enrolment will soon be an anomaly but should be lowered from 22 to 18 at the earliest opportunity,” he stated.

“This should happen alongside the next phase of the Pensions Review, which needs to define the objectives for auto-enrolment, as well as where contribution rates should be set and in what timeframe.”

Smart Pension CEO, Jamie Fiveash, agreed, clarifying that whilst he was “reassured” that pension changes haven’t been rushed and that the government seems to be using both stages of the pensions review to focus on key issues, “the simple truth” remains that people are not saving enough.

“We believe that savers’ futures have been impacted through historic inaction and there are some straightforward changes that could and should be made soon," he stated.

"For example, the expansion of auto enrolment, where current limitations disproportionately affect many women and younger people, is something we will continue to rally for.

"A timetable of these and similar changes would have been useful, though we are supportive of the government using the pension review to collect industry thoughts and implement considered changes in the upcoming Pension Bill.”

PensionBee director of public affairs, Becky O'Connor, also pointed out that, with legislation enabling the extension of automatic enrolment passed a year ago, it’s "disappointing" to not see it mentioned to give reassurance that savers’ retirement outcomes are being prioritised and to provide employers with clarity for planning purposes.

Jarvis CEO and founder, Royden Greaves, also suggested that specific reforms to auto-enrolment are needed to help support the self-employed, "an often-forgotten sector of the workforce".

This is not the only 'missed opportunity', as Association of Consulting Actuaries (ACA) chair, Stewart Hastie, said it is a “shame” the cycle of pensions tax change speculation wasn’t put to bed.

“In a “budget for stability”, we’ve had a corporate tax roadmap but no pensions tax roadmap!" he added.

AJ Bell director of public policy, Tom Selby, agreed, arguing that "the chancellor’s failure to commit to a Pensions Tax Lock means there is every chance instability will rear its ugly head again before next year’s fiscal event".

"We have seen in recent months just how destabilising this speculation can be for people, with both contributions to pensions and the number of people accessing their tax-free cash increasing markedly ahead of the Budget," he stated.

"When it comes to tax-free cash, in particular, any decision to take your money could be irreversible and could result in people losing out in the long term."

Broader pension changes could still lie ahead, as Broadstone head of policy, David Brooks, suggested that the Chancellor will place a stronger emphasis on pensions in the upcoming Mansion House speech in November.

He stated: "The summary of the first part of the pension review is imminent, and the second part of the review which is due to look at adequacy and wider issues, will also be launched around this period.

“The Pension Schemes Bill, likely to be before the House Spring/Summer 2025, also gives us plenty to look forward to, discuss and plan for, from a pensions perspective.

“It remains possible that some of the thornier issues for reform, which could well be beneficial to many millions, will be given due consideration in this process to ensure the pros and cons are thought through and understood.”

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