Jelf welcomes Budget pensions action

Although the full details of the Budget are not fully understood yet, the employee benefits consultancy broadly welcomed its effect on the pensions sector.

Jelf Employee Benefits head of benefits strategy Steve Herbert, said: "One important point was made clear: There appears to be no significant changes to the structure of pensions tax relief at this time.

"This is good news, and puts paid to many of the scare stories being circulated by some other sectors of the industry."

The Chancellor also used the Budget to announce several significant moves affecting state pension levels, particularly an automatic review of state pension age to reflect national longevity trends and the scrapping of age related allowances to be replaced with a single tier pension of around £140 per week.

However, Herbert was more qualified in his commendation of these changes, noting that many employee benefits rely on some level of underpinning from the state benefit system and are often designed to dovetail together.

"Whilst at first glance this may not appear that significant to employers, it should be remembered that the default retirement age was recently scrapped," he said.

"Given this, many employees will continue in work until (and if) they can afford to retire.

"That point is likely to be moving ever further away if state pension age regularly increases.

"So payment of the state pension may now be further away for many, but at least the state payments will be much easier to quantify and plan against," he added.

The budget was also used to close some loopholes in the employee benefits and pension arena, one of which Herbert gave his overwhelming backing to and highlighted that it would not affect most typical employees salary sacrifice contributions.

"This budget, like all others, has been used as an opportunity to bring clarity to a few areas of ambiguity," he said.

"For one, if people were being seduced by the idea of sacrificing salary to avoid both tax and National Insurance, and then applying it to another family member's pension scheme, this option is now, quite rightly, not allowed.

"It would be expected that this concept would have been largely used as a tax-planning trick for those with an already high level of pension saving, who were seeking to avoid both the maximum pension saving rules, and their share of the taxation burden.

"Finally, it's worth highlighting that this does not impact on salary sacrifice for use in the employee's own pension savings, so there is no change here for the vast majority of employers and employees that use this option," he concluded.