Tax regime

The tax regime for pensions remains unchanged, with the same controls (eg annual allowance(s) and the lifetime allowance) at the same levels.

Future of RPI

The House of Lords Economic Affairs Committee published a report in January 2019 with several recommendations regarding the future of the Retail Prices Index (RPI). Many pension schemes have liabilities which are linked to the RPI through RPI-based increases to pensions in deferment or payment. In addition, many pension schemes hold index-linked gilts, which are again linked to RPI.

The Committee argued that the UK Statistics Authority (UKSA) should attempt to 'fix' the 'flaws' in the calculation of the Retail Prices Index (RPI). If this fix is considered detrimental to the holders of index-linked gilts, then the change can only be made with the Chancellor of the Exchequer's consent. The Committee urged the Chancellor to consent to any such change.

The Committee also called on the Government to stop issuing new RPI-linked gilts and for the authorities to adopt a single general measure of inflation within five years.

Today the Chancellor confirmed that the government is discussing these issues with the UKSA and will respond to the Committee's report in April.

Index linked gilts

The Debt Management Report was also published setting out the financing remit for 2019-20. This showed a 2% reduction in the proportion of index-linked gilt issuance (as a share of total issuance) planned for 2019-20 (19.1%) compared to that previously planned for 2018-19 (21.1%). This is the same planned reduction as applied in 2018-19, and so continues the government’s drive to reduce the proportion of index-linked gilt issuance in a measured fashion over the medium term.

Brexit-readiness for the financial sector

In a speech that made the Chancellor's reservations about the financial impact of Brexit very clear, he announced that the government will consult later this year on how to ensure that in the immediate period after the UK leaves the EU, that the country can maintain world-leading financial regulatory standards, remain open to international markets and tap into new trading opportunities. Before the summer (which presumably means by 21 June), the government will set out how to ensure the Financial Services regulatory framework adapts to our new constitutional position outside the EU (of course there is a line of thought that his may not come to pass….). It will look at how to "ensure financial stability is delivered through an effective regulatory framework, with the responsiveness necessary for a dynamic and open financial services sector and an appropriate level of democratic accountability".

Simplifying amending tax returns

The very last point in the Written Ministerial Statement accompanying the Spring Statement was "Amendments to tax returns – A call for evidence on simplifying the process of amending a tax return". Assuming this refers to individual's self-assessment tax returns, this isn't directly relevant to pension schemes, but any annual allowance (AA) charge eg relating to the tapered AA, is reported through the return. The complexity of calculating these charges mean that this is an area where amendments are more likely and so a simplified process could help.