Autumn Budget 2018: Three pensions changes you may have missed

Published by Faith Glasgow on 29 October 2018.
Last updated on 29 October 2018

Even in your 40s, you can start saving for a £100,000 pension

Pension allowances and tax relief were left well alone, but there was some pension news for consumers to digest. Here are three changes that went under the radar.

The chancellor stopped short of major pension changes in his Budget speech, but the small print holds several significant pension announcements.

There was little or no mention of the P word in chancellor Philip Hammond’s Budget speech this afternoon (29 October). Pension allowances and tax relief were left well alone.

However, pensions were not ignored altogether, as a trawl through the Budget documents reveals.

The Pensions Dashboard

Hammond has committed to a consultation later this year on the implementation of the Pension Dashboard, and to the inclusion of state pension information in it.

“While the 2019 implementation deadline still feels like a stretch, the fact a commitment has finally been made by the DWP to provide state pension information is a positive step in the right direction,” comments an AJ Bell spokesperson.

Steve Webb, director of policy at Royal London, adds: “It is a real step forward that the government has indicated that state pension data will be included in the design of what it calls ‘pension dashboards’.

“This greatly increases the prospect of dashboards which cover all the key pension information that consumers need to know. The additional £5 million a year for the DWP in 2019/20 is also a welcome symbol of the fact that the government is committed to taking this agenda forward, albeit more slowly than we would have wished”.

However, AJ Bell is less bullish. “For the project to have any chance of success, savers need to be confident the information available is both accurate and comprehensive. Anything less than this and people simply will not trust the information it shows them.

“For this reason it is highly likely the government will need to legislate to require older schemes to make their information available for the Dashboard.”

‘Patient capital’ funding

The government has hinted the 0.75% charge cap for contributions to companies’ auto enrolment schemes could be increased next year. It also promised to consult into encouraging pension funds to invest more into high-growth small and medium enterprises.

AJ Bell says: “While details are thin on the ground at this stage, it may be that the chancellor feels the existing charge cap potentially blocks schemes off from investing in the riskier next-generation companies he expects to drive growth in the future.”

However, there clearly needs to be a balance between stimulating returns from higher-growth businesses and maintaining value for money for pension scheme members.

AJ Bell adds: “Ultimately the aim of auto-enrolment default funds schemes is to maximise returns for retirement investors over the long-term rather than back particular sectors or businesses. If the charge cap were increased for certain types of investments, the trustees of that scheme would have to be confident the extra price paid by members was still money well spent.”

Cold-calling ban

The government is publishing a response to its consultation alongside the Budget, and promises that it will shortly be implementing legislation to ban cold calling – an announcement that has been a long time coming.

It is almost two years since the government’s initial proposals to combat pension scams were announced, with the cold calling ban at their heart, but draft regulations were not published until this July.

Vince Smith-Hughes, retirement expert at Prudential, says: “Measures to ban pension cold calling can’t be introduced soon enough. Our research indicates that nearly one in 10 over-55s fear they have been targeted by scammers since the launch of Pension Freedoms in 2015. Offers to unlock or transfer funds are tactics commonly used to defraud people of their retirement savings.

“One in three over-55s say the risk of being defrauded of their savings is a major concern following Pension Freedoms. However, nearly half of those approached say they did not report their concerns because they did not know how to or were unaware of who they could report the scammers to.”

However, David Everett, partner at pensions consultancy LCP, points out: “There is a potential gaping hole, however, when it comes to enforcement of this if calls are made from abroad and not on behalf of a UK company. In those instances, the Government will find itself powerless. The Information Commissioners Office will need to have arrangements in place with international regulators to mitigate the dangers and irritations posed by such calls.”

This article first appeared on our sister website Money Observer.

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Following a cold call in

Following a cold call in early 2014 we agreed to meet with a pension advisor and my husband and I were persuaded to move his former company pension (frozen after redundancy in 2008) to a new scheme. as his then employer did not have a pension scheme it seemed like the next best option. A total of £59,000 was transferred (£41,000 after tax free lump sum) and reinvested in a QROP the investment appeared genuine (London & Colonial Trafalgar Multi Asset Fund) and was HMRC registered and based in the British colony of Gibraltar.

We received no warning advice from Aegon (former pension trustee) when he requested transfer which we should have received (Scorpion warning), so we were not aware that this type of investment was not suitable for ordinary UK investors, and should not have been promoted to those who did not intend to live abroad in retirement and so with no concerns raised the transfer went ahead in May 2014.
The first issue was not raised until 6mths after the transfer to new scheme when irregularities were noticed with the management of the investments, within days of being informed of these concerns but before we could seek independent advice we received letter signed from 'The Pension Reporter' who we assumed was an investigative authority (in reality it was the investment manager) reassuring us that they were monitoring the situation.
A follow up letter a month later stated they had conducted a review and felt that it was still a sound investment and had so far performed well, we were warned there would be substantial financial penalties if he chose to withdraw his pension so we left it alone.

Less than a year later the fund was suspended and following investigations it was decided to wind down the fund and an auditor/administrator was appointed to try and recover the monies invested from the various investment entities involved in the scheme, to date along with approx. 400 others we are still no nearer to getting his pension back.

It has since some to light (initially from Pension Life) that the 'independent' financial advisor we were introduced to (by the guy who visited us at home to discuss the pension) was not qualified to give pension investment advice and in addition he was also the investment manager (a direct conflict of interest), he is currently the subject of an investigation by the SFO.

Investigations have since shown that this was an elaborate and complex scam and one of several the same investment manager has been heavily involved with over the past decade.

As a result of this scam my husband (now 65) has to continue working as for past two years I have had poor health forcing me to quit my job.

I cannot help but think that we (any many others) would not be in this situation if the Government had put strong safeguards to protect people from scammers BEFORE they gave people the right to move pensions.

Following a cold call in

Following a cold call in early 2014 we agreed to meet with a pension advisor and my husband and I were persuaded to move his former company pension (frozen after redundancy in 2008) to a new scheme. as his then employer did not have a pension scheme it seemed like the next best option. A total of £59,000 was transferred (£41,000 after tax free lump sum) and reinvested in a QROP the investment appeared genuine (London & Colonial Trafalgar Multi Asset Fund) and was HMRC registered and based in the British colony of Gibraltar.

We received no warning advice from Aegon (former pension trustee) when he requested transfer which we should have received (Scorpion warning), so we were not aware that this type of investment was not suitable for ordinary UK investors, and should not have been promoted to those who did not intend to live abroad in retirement and so with no concerns raised the transfer went ahead in May 2014.
The first issue was not raised until 6mths after the transfer to new scheme when irregularities were noticed with the management of the investments, within days of being informed of these concerns but before we could seek independent advice we received letter signed from 'The Pension Reporter' who we assumed was an investigative authority (in reality it was the investment manager) reassuring us that they were monitoring the situation.
A follow up letter a month later stated they had conducted a review and felt that it was still a sound investment and had so far performed well, we were warned there would be substantial financial penalties if he chose to withdraw his pension so we left it alone.

Less than a year later the fund was suspended and following investigations it was decided to wind down the fund and an auditor/administrator was appointed to try and recover the monies invested from the various investment entities involved in the scheme, to date along with approx. 400 others we are still no nearer to getting his pension back.

It has since some to light (initially from Pension Life) that the 'independent' financial advisor we were introduced to (by the guy who visited us at home to discuss the pension) was not qualified to give pension investment advice and in addition he was also the investment manager (a direct conflict of interest), he is currently the subject of an investigation by the SFO.

Investigations have since shown that this was an elaborate and complex scam and one of several the same investment manager has been heavily involved with over the past decade.

As a result of this scam my husband (now 65) has to continue working as for past two years I have had poor health forcing me to quit my job.

I cannot help but think that we (any many others) would not be in this situation if the Government had put strong safeguards to protect people from scammers BEFORE they gave people the right to move pensions.

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