Pensions policy commentators have called for the cut to the Money Purchase Annual Allowance to be pushed back to at least 2018 in the wake of the hung parliament election result.
Old Mutual Wealth retirement policy head Jon Greer says: “The result casts uncertainty over whether the postponed elements of the Finance Bill will be pushed through, including the reduction in the pension money purchase annual allowance.”
The proposal to cut the MPAA from £10,000 to £4,000 was first announced in the Autumn Statement and, following a consultation, was confirmed in the Budget. It was supposed to be introduced on 6 April.
AJ Bell senior analyst Tom Selby says “urgent clarity” is needed on whether the MPAA cut will be applied retrospectively.
Selby says: “This would be particularly harsh given many savers will have had no idea the new allowance had been announced. It would seem sensible to delay the cut until 2018, or at the very least allow anyone facing a tax charge to get a refund of their contributions.”
Nucleus product technical manager Rachel Vahey says advisers are “in limbo” over how much the MPAA is for the 2017/18 tax year.
She says: “The longer this hiatus lasts, the less likely it seems that the government can backdate this piece of legislation to the start of the tax year when – or if – it is eventually passed.”
Fidelity International pensions policy head Richard Parkin also calls for the MPAA cut to be postponed until at least April 2018.
Parkin wants to see any future change based on evidence and hopes it would form a “more considered overall approach” to pension tax relief.
The clampdown on pension scammers was also pushed back as a result of the election and Selby has called for the measures put forward in the Treasury’s consultation to be implemented as soon as possible.
However, he adds: “It looks like politics will get in the way of this important reform for a while longer.”