UPDATED: Reactions to Chancellor's Autumn Statement

Financial Planning firms and providers have given a mixed response to today's announcements made by Chancellor George Osborne in his third Autumn Statement. Announcements have included a lifetime allowance cut from £1.5m to £1.25m, a cut in pension contributions from £50,000 to £40,000, capped drawdown limits increased from 100 per cent to 120 per cent and an increase in the Isa limit to £11,520.The personal income tax allowance has been increased to £9,440 and the high-rate tax bracket has been increased by one per cent to £41,865.John Cridland, director-general at the Confederation of British Industry, said: "The Chancellor has avoided some of the more sweeping effects that would have been caused by cutting the annual tax relief limit to £30,000 but the cut to £40,000 still undermines the Government's efforts to encourage saving and investment in our economy."We are pleased that the Chancellor recognises the economic case the CBI has made for addressing pension fund deficits. Giving the Pensions Regulator a focus on growth and allowing scheme deficit calculations to reflect the long-term nature of pensions will ensure that funds are not diverted away from investment."Andrew Tully, pensions technical director at MGM Advantage, said: "We recognise there is an urgent need to help people who have seen a significant fall in their drawdown income. However, there is a need to tread with caution as there are underlying reasons for previously changing the income limits still there."There is potential for drawdown customers to run down their fund quickly. So a balance needs to be struck between short-term income needs and ensuring income is secured for life."Skandia pension expert Adrian Walker said: "The reduction in the annual allowance down to £40,000 will control the amount of money flowing into pensions and the amount of tax relief given so it is hard to see the rationale for limiting the investment growth of a pension. The lifetime allowance effectively caps good investment performance and penalises those who save and managed their investments well."The Government should be doing more to encourage young people to take responsibility for their future and to start saving early towards retirement. Today's announcement may be seen by many as just another barrier that could have a detrimental impact on the view of ordinary, hardworking savers towards using pensions to save for their retirement."{desktop}{/desktop}{mobile}{/mobile}Tom McPhail, head of pensions research at Hargreaves Lansdown, said: "Over the next twenty years, many people already in middle age will find that without making substantial lump sum payments to their pensions, they will struggle to hit the kind of pension target they aspire to. By reducing the annual allowance, the Chancellor has made it harder for them to manage their income, expenditure and savings patterns through their lifetime."This will particularly affect long serving members of final salary schemes who experience significant pay rises and older members of defined contribution pensions who are trying to catch up on their pension funding."Ray Chinn, head of pensions at LV=, said: "It is disappointing the Government has decided to lower the annual allowance twice in as many years. We're concerned that it sends the wrong message not only to those who are currently saving for their retirement, but those who should be."These proposed changes risk further alienating people from the need to plan for retirement and could result in more people struggling to fund their retirement. This is particularly the case for those who are more able to make larger pension contributions later in life when other financial commitments have reduced – the reduction in annual allowance will hit these individuals hardest."The changes to the drawdown limit is good news, especially for those customers who have been badly hit by previous reductions."Paul Goodwin, Aviva's proposition and strategy development director for corporate benefits, said: "Making changes to pensions tax relief to help pay off Britain's debts will send a confusing message at a time when it's absolutely critical we get the nation's workers putting adequate money aside for their retirement. "Automatic enrolment will get millions more people saving into a pension, and it's essential that we create a sense of urgency that people need to start saving now. Such a change will introduce more disruption and complexity to the pensions system at a time when it least needs it." • Want to receive a free weekly summary of the best news stories from our website? Just go to home page and submit your name and email address. If you are already logged in you will need to log out to see the e-newsletter sign up. You can then log in again.

UPDATED: Reactions to Chancellor's Autumn Statement

Related items

News from Twitter