The machine rolls on but questions remain
Earlier this month, Osborne bowed to pressure and u-turned on plans to reform the tax treatment of pensions, to stave off the risk of antagonising savers ahead of the Brexit vote. The proposals were dropped but the market will be hoping the tax relief policy won’t be back in time for the Autumn Statement.
Instead, the unrelenting machine of the Treasury, with its mission to make savings appealing to a wider spectrum of consumers, has now set its sights on ISAs. The Chancellor has again raised the overall annual ISA subscription limit, but today went one better and invented a new product – the Lifetime ISA, or ‘LISA’ as some journalists have already christened it.
The details of this new saving product for those under 40s are still coming out so we will wait to see how effective the Treasury’s communication programme can be in giving the level of detail providers and savers will need in order for this service to fly in April 2017. Early reviews are not overly positive however, with some suggesting it’s a backdoor way into pension tax relief reform.
One part of the Government’s savings engine which has been found wanting are the statutory financial guidance providers. The machine has decided that these need to be “restructured” to ensure that consumers can access the help they need to make effective financial decisions. So in addition to the demise of the Money Advice Service, already trailed, it’s goodbye to The Pensions Advisory Service and Pension Wise with a new slimmed down money guidance body and a new pensions guidance body taking their places.