Budgetary constraints

All eyes are on the Budget as benefit consultants ponder what George Osborne is planning for the tax regime

This year’s Budget looks to be as significant as the last. With the UK still struggling to get momentum behind its nascent recovery, further tightening of the tax noose is expected and this is likely to affect the benefits sector in some way. The bottom line is chancellor George Osborne has several more billions to fund this year, next year and the year after if he is to meet his deficit-cutting target. And yet at the same time the LibDems are pushing hard for a lightening of the tax burden for lower income groups.

Will that mean further cuts in pension tax allowances? The popular mood suggests hitting so-called pension fat cats would be welcomed, but would need to be done in a way that it only affects someone else. That points to a tightening of the annual allowance. It is hard to miss what you don’t understand.

The popular mood suggests hitting so-called pension fat cats would be welcomed, but would need to be done in a way that it only affects someone else. That points to a tightening of the annual allowance. It is hard to miss what you don’t understand

We may see an increase in the £150 per employee tax break for advice as a concession to auto-enrolment implementation, but it seems unlikely seeing as many financial advisory firms do not even use what is already there.

As to tax breaks for back to work products, that is unlikely to make the cut for this budget, given the civil servants taking forward the Frost/Black review are still digesting its contents.

Away from tax matters, this month we introduce a new way of looking at default funds, in conjunction with DCisions, the pensions data provider. This research complements and builds upon our Ultimate Default Fund competition, won for a third consecutive year by the ever-popular Scottish Life Governed Range. The research takes the default funds on the shortlist and compares the actual outcomes achieved by individuals in them, benchmarked against a universe of over a million DC members in DCisions’ database.

We hope you find this approach brings a new perspective to the default fund debate – we see it as the start of a greater understanding of default outcomes and would welcome your feedback on it.

John Greenwood, editor
john.greenwood@centaur.co.uk