Wednesday 28th February sees updated personal pension contributions and tax relief data from HMRC. The update will provide data for the 2016/17 tax year. Contributor Nathan Long, Senior Pension Analyst – Hargreaves Lansdown.
2015/16 saw the cost of tax relief leap by £3.3 billion to £38.2 billion. Prior to that the cost had remained relatively stable going back to 2010/11. Auto-enrolment, which requires employers to automatically join staff to a company pension, was still being rolled out in 2016/17 so the period should see an increase in the amount being paid in contributions.
More of us are paying greater amounts into our pensions, but what is good for the retirement prosperity of the nation is becoming an increasingly expensive headache for the Treasury. A big jump in the cost of tax relief could see the Government feel more inclined to water down the incentives offered to save for our life after work.’ We will be covering this release on the day, so feel free to get in touch.
New annuity rules
Thursday 1st March sees the introduction of new rules for annuity providers, the snappily titled PS17/12 from the FCA.  In a nutshell the rules dictate that when you receive an annuity quote, it must also include a comparison to the rest of the market. The FCA’s behavioural testing suggests this will prompt people to shop around to ensure they are getting the best rate. It is much needed: Only around 45 percent of people who buy an annuity shop around for the best rates
The average annuity purchase size is now around £60,000
Weighing up your options at retirement is absolutely crucial and this is especially the case when it comes to buying an annuity. Last year the FCA found 80 percent of people who purchased an annuity with their existing provider could have found a better deal on the open market, so anything that encourages shopping around is welcome.
More than half of people opting for an annuity receive an improved income because of health or lifestyle, but the new rules are fairly flimsy on this point and are not offering the same level of prompt. It remains to be seen if these new measures create a frenzy of annuity activity, but with rates at a two year high their introduction is certainly timely.’
