Whilst there weren’t many headline grabbing items from a pensions perspective, this year’s Budget continues the government’s theme of focusing on pension scams and ways that the pension system could be abused.
Since the introduction of the Pension Freedoms regulations in 2015, individuals have had the flexibility to access their pension pots faster than ever before. Government figures show that the additional tax generated for the Treasury is far higher than initial expectations, generating £2.6bn in the first two years.
The win win of increased flexibility for the individual and increased tax revenues for the government has however come at a cost in terms of an increase in activity from pension scammers and also abuses of tax relief within the system. The recent government consultation in this area showed their intention to start to close the door on the scammers and this budget has followed the theme by introducing a charge of 25 per cent for transfers to Qualifying Recognised Overseas Pension Schemes ('QROPS') and also more stringent tax registration processes for Master Trusts. Both these changes will make life harder for the scammers to operate and should be welcomed.
In addition, the reduction in the Money Purchase Annual Allowance from £10,000 to £4,000 pa is aimed at individuals looking to recycle funds through pension schemes thereby benefiting from a second round of pensions tax relief.
Undoubtedly more measures will be required and will follow in the future but the pensions industry should for now be happy that the chancellor's target this time has been to take funds and opportunity from the pockets of the scammers and not from the industry itself.