Saga Investment Services reacts to the Autumn StatementWednesday 25 November 2015
• Government must act to cap pension exit fees • 12 million(2)over 50s will be disappointed with freeze on ISA allowance • But inheritance tax change on pensions will be welcomed by over 50s
Saga Investment Services reacts to the Autumn Statement
Responding to today’s Autumn Statement, Gareth Shaw, head of consumer affairs at Saga Investment Services, said:
“Having bestowed pension freedom upon nation’s over 50s in April, the Chancellor has largely left pensions alone in this year’s Autumn Statement.
“Boosting the basic state pension, giving confirmation of the single-tier rate and removing the Inheritance Tax risk for funds passed on in drawdown are all to be welcome. But there are still obstacles blocking over 50s from the retirement they deserve.
“We’re still waiting for the Government to take action on unfair pension exit fees, and the freeze on the ISA allowance will disappoint many. And while the final clarity on the £155-a-week single-tier State Pension is welcome, the Government must now focus on communicating the changes to people.”
On pension exit
“Charging fees of up to 40% on a pension taken out three decades ago is wildly out of line with the freedom over 50s have been given with their retirement savings. And if their pension company won’t give them access to their money in the fullest, they shouldn’t be stung by fees to switch. Almost 700,000 over 55s face penalties for using their freedoms to the fullest and we urge the Government to take action as quickly as possible.”
On freezing the ISA allowance to £15,240 in 2016/17
“ISAs are an integral part of the retirement planning process – indeed more than 12 million over 50s now hold an ISA, and the significant savings they have built up can help them generate a retirement income tax efficiently.
Now that pensions have become a much more tax-efficient vehicle for passing on your savings – made even more attractive with the changes to inheritance tax on funds in drawdown – retirees are increasingly using ISAs for their everyday spending. While the ISA allowance has become a lot more generous, the freeze will disappoint all those using these popular accounts to fund their retirement."
On pension tax relief
“No-one expected the Chancellor to announce his ‘radical’ shake up of the pensions system, nor the speculated end to pension tax relief, to appear in this Autumn Statement. Whatever the Government decides next year, however, it looks as though pension tax relief as it is today is marked for the axe.
“Saga is calling on the Government to offer pension savers a ‘buy-one-get-one-free’3 deal on their pensions – so that every £1 saved is matched and the maximum incentive is capped. This would apply to any pension saver, no matter how little or much they earned.
“Two thirds4 of people say they would be more likely to save if such a deal was in place.”
On the £155.65 single tier pension
“The State Pension is the bedrock for financial planning for retirement. The Government must do more to explain how next year’s single-tier system will work.
“The current system is horribly complicated, and the new single-tier will eventually wave away this complexity. But next year’s generation of state pensioners need more help understanding what they’re entitled to.
“A third of over 50s5 have no idea if they’ll be better off or worse under the new State Pension, while less than one in 10 (7%) of over 50s know how to boost their pension before they finally claim it. The Government must do more to help the over 50s properly plan for retirement."
- Ends -
Notes to editors
1. FCA pension freedoms data collection exercise: analysis and findings, September 2015
2. HMRC ISA statistics, August 2015.
3. See http://www.saga.co.uk/newsroom/press-releases/2015/october/saga-urges-government-to-bogof-to-encourage-pension-savings.aspx
4. Populus, on behalf of Saga, based on a representative sample of 2,032 adults carried out between 23 and 24 September 2015. Populus is a member of the British Polling Council and abides by its rules.
5. Populus, on behalf of Saga, based on a representative sample of 10,010 UK adults aged 50 and over, online between 14th and 20th November 2014. Populus is a member of the British Polling Council and abides by its rules.
About Saga Investment Services
Saga Investment Services has been developed to open up the world of investing and financial planning to the UK’s over 50s in the run up to and throughout retirement, and to make the process as simple and stress-free as possible. Customers can invest from just £100, and have access to investment advice and financial planning services. Saga Investment Services champions a straight forward and transparent approach to investing, and is a proud member of the Plain English Campaign. It is a joint venture between Saga, the leading provider of services to the nation’s over 50s, and Tilney Bestinvest, the expert investment and financial planning group.
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