Will Brexit Derail Pension Freedoms?

Wondering if Brexit will affect pensions? Clifford Osborne IFA explains what the future might hold…

With the vote to leave the EU creating uncertainty in many quarters, some experts have questioned whether pension tax relief and the reforms introduced in April 2015 might come under the spotlight and be subject to change.

The view put forward is that if the Government and Prime Minister need to make fiscal adjustments to protect the UK economy during its withdrawal from the EU, reducing generous pension tax relief, including the treatment of pensions on death, might have a part to play in balancing the books.

The changes covering the treatment of pensions on death allow the fund to be passed on tax-free when death occurs before age 75, and taxed at the beneficiary’s marginal rate post age 75.

The removal or reduction of tax concessions like these would save the Exchequer considerable sums of money. In addition, the introduction of the secondary annuity market was originally set for April 2016 but is now due to take effect in April 2017.

The Lifetime ISA is also due to launch in April 2017 but similarly could be set to change, especially as key details surrounding the account are yet to be announced.

WHAT THE FUTURE MIGHT HOLD

Former Pensions Minister, Baroness Ros Altman, has expressed the hope that whatever the economy has in store, we shouldn’t lose sight of the long-term need for pensions, especially for future generations.

The Chancellor, Philip Hammond has made it clear that he intends to abandon the previous goal of eliminating the deficit by 2020, giving considerable support to the view that pension freedoms may not need to be changed, at least in the short term.

Whilst the economic landscape looks set to face change and upheaval, the key message remains clear; we all need to ensure we’re making adequate pension provision by taking advantage of each year’s tax relief on contributions while we can. It could be a case of ‘use it or lose it’.

Clifford Osborne are Independent Financial Advisors (IFA) based in Eastbourne, East Sussex, offering pension planning advice,mortgage advice, pension scams advice and more. You can read our VoucherFor reviews here. Our clients often come from Uckfield, Lewes, Brighton, Tunbridge Wells, Hastings, Bexhill, Newhaven, Seaford, Crowborough and further afield.