From Morningstar: 2024-08-20 09:43:00

Rachel Reeves will deliver the first Labour-led government Budget since 2009, making her the first woman to do so. However, challenges lie ahead with higher inflation, talk of a fiscal “black hole,” and the possibility of tax hikes mentioned. Pensions are expected to be a key focus in her speech.

Pension tax relief has long been a topic of speculation, with proposals for a flat-rate of around 30%. Reeves previously supported a similar measure at 33%, but public sector pay disputes may influence decisions. Potential changes could impact both higher and lower earners, posing challenges for the government.

Reeves is expected to continue Jeremy Hunt’s policy of encouraging UK pension schemes to disclose investments in UK assets. Policies like “Pot For Life” and default pension consolidation may also be considered, addressing issues with multiple pension pots accumulating over a worker’s career.

The Financial Conduct Authority plans to introduce a “traffic light” system for workplace pension schemes, allowing savers to compare schemes based on performance and quality. Poor-performing schemes may be required to move assets to better schemes, giving savers more control and options for engagement.

Reeves’s visit to Canada explored consolidating local government pension schemes for better returns and growth. While workers may not see immediate impact, such policies could have significant effects on pension funds and infrastructure projects in the long term.

Labour’s plans may impact working-age savers through changes in pension tax relief, potential consolidation policies, and the introduction of new systems like the traffic light scheme. Reeves’s commitments to certain policies like the State Pension Triple Lock but removal of winter fuel payments for some retirees reflect Labour’s approach to supporting pensioners.



Read more at Morningstar: How Will Labour’s First Budget Affect my Pension…