Industry Insights

Read the latest financial industry insights, hand-picked by the Wealth of Advice team… 

Chancellor warned against £30bn tax grab in Budget

Conservative backbench MPs have warned the chancellor against making tax hikes after reports that he is mulling a raft of cuts worth £30bn to pay for the Covid-19 finance black hole. Chancellor Rishi Sunak is considering increasing corporation tax from 19% to 24% in his November Budget, cutting pension tax relief and increasing capital gains tax rates. However, following the report in The Sunday Times, Conservative MPs were quick to warn the chancellor against raising taxes to pay for...

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Government confirms pension freedom age hike to 57

The government has confirmed it will raise the minimum age at which people can access their private pension from 55 to 57 in 2028. Secretary to the Treasury John Glen confirmed today that the changes will be legislated for ‘in due course’ in response to a question from Labour MP Stephen Timms. The government first announced the plans in 2014, which Glen said enabled people to make financial plans ‘well in advance’. ‘In 2014, the government announced it would increase the minimum pension age to...

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Government urged to use pension tax hike to pay Covid debt

The government should consider raising the amount of tax retirees pay on their pension withdrawals to help pay off the UK’s Covid-19 debt, the Institute for Fiscal Studies has said. Appearing at a Treasury Committee hearing on tax after coronavirus, Paul Johnson, director at the IFS, said pensioners were a feasible target as they had been protected from past tax rises and have received generous benefits from their pensions. Mr Johnson said the amount of tax paid on pension withdrawals could be...

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DB transfer values rocket to more than £500k

The number of defined benefit transfer requests has dropped in the past quarter but the average value still rocketed to above £500,000. According to consultants LCP, the average DB transfer in the three months to June was £556,000, up 30 per cent compared with the first quarter, and the first time in three years it has exceeded half a million pounds. The firm said the figures indicated the DB transfer market was moving to a smaller number of higher-value transfers. Among the 80 schemes...

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One in 20 workers short-changed on pension

One in 20 employees are being short-changed by their employer and are not receiving the pension they are due, with low-paid, part-time workers particularly at risk of auto-enrolment non-compliance, research has found. A report into auto-enrolment enforcement by the think tank Resolution Foundation found one in 20 of workers eligible to receive a workplace pension have either not been enrolled by their employer or are receiving contributions below the minimum level. The report warned many may...

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Value-chasing pension savers turn to higher-risk assets

The coronavirus crisis has pushed pension savers towards riskier assets, according to advice firm My Pension Expert. The adviser found one in eight savers had moved their pension funds into a higher-risk investment to make up for lost value during the market turmoil caused by the pandemic. It found a similar number (12%) had withdrawn from their pension during the crisis without seeking financial advice. In its survey of 2,000 UK adults in late July, My Pension Expert found 84 per cent of...

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Pension scams cost savers £30m since 2017

More than £30m has been reportedly lost to pension scammers since 2017, according to complaints filed with Action Fraud. The Financial Conduct Authority and The Pensions Regulator have revealed victims suffered losses ranging from under £1,000 to as much as £500,000, but the total lost because of pension scams could be significantly higher than the £30m figure as many savers do not know how much is in their pots. Many also fail to spot the signs of a scam, the regulators say. As part of the...

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Warning on women ‘overinvesting’ in cash

Women continue to ‘overinvest’ in cash ISAs, threatening to miss out on valuable returns in the long term, an adviser has warned. According to analysis of HMRC Isa statistics by Bowmore Financial Planning, the gender gap between the number of men and women holding cash ISAs has “failed to narrow over the last five years”. Data for the number of individuals subscribing to a cash Isa in the 2017-18 tax year (the latest available data) shows women accounted for more than half (55 per cent) of the...

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‘Smoothing’ triple lock could solve state pension problems

Smoothing the triple lock formula to take a two-year average of each element could save the policy while avoiding distorted state pension rises, according to Aegon. The pensions giant suggested there may need to be “temporary adjustments” to the triple lock pledge to ensure “artificial distortions” from the furlough scheme and the economic repercussions of the coronavirus crisis are smoothed out. Under current rules, the state pension is increased by the highest of earnings growth, price...

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Call for end to flat rate fees in workplace pensions

A call has been made for an end to monthly flat fees charged on defined contribution pensions arguing they can be “detrimental” to low-paid workers and could erode whole pots. In its response to the Department for Work and Pensions’ consultation on the automatic enrolment charge cap, consultancy firm LCP said fixed fees can “steadily erode” small pension pots, especially those left behind when people change jobs, and in extreme cases can reduce the pot to zero. LCP said this was both “unfair...

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