This week's budget has been a relatively quiet one for pensions which was a surprise to many experts who were expecting the Chancellor, Philip Hammond to tinker with them to raise cash. In actual fact, the one main measure, the raising of the lifetime allowance was actually a small tax giveaway.
Whilst many people have seen it as a relief that there have been no significant changes, it does mean that the difficult issue of pensions tax relief reform has been put off yet again, with many pension experts believing that the system needs significant reform. This was echoed by the former pension minister Sir Steve Webb who called for a long-term vision or plan on pensions.
No long term vision or plan
"Whilst it's a relief that we have had a budget with no changes to pension tax relief, we still do not have a long-term vision or plan. So next year and the year after we will still have speculation and uncertainty until the government decides what it wants to do with tax relief and then leaves it alone."
The decision to leave pensions alone could actually save the Treasury money as it could incentivise people to take a calmer approach to making contributions. This is because with previous cuts to pension lifetime and annual allowances they actually encouraged people who could afford to contribute to contribute more, fearing it being the last opportunity to get the tax reliefs before they were cut, fuelling further tax relief spending by the Treasury.
The potential savings could be good news for the Treasury with the latest figures from the Office for Budget Responsibility showing that the tax took from flexible pension withdrawals was £500 million less than anticipated.