Budget Spring 2024: Pension changes

Compared with recent years, the pensions changes announced in the Budget were relatively minor this year. The Chancellor, Jeremy Hunt, confirmed in his Budget speech on March 6, 2024, that the Government intends to consult on:

• Requirements for DC schemes to publicly disclose asset allocations, including the proportion of their assets invested in UK equities, together with new powers for the Regulator and the FCA to step in where schemes do not deliver sufficient returns. Current data suggests that pension schemes' aggregate allocation to UK equities has fallen from 53 per cent to 6 per cent over recent decades. The FCA will consult in the spring on proposals requiring publication of contract-based DC scheme default funds' historic net investment returns and a breakdown of UK investments.
• Comparison of schemes’ performance, costs and other metrics against those of at least two schemes managing over £10 billion in assets. The measures will form part of the Government's proposed new value for money (VfM) framework in DC schemes. The Government plans to legislate "at the earliest opportunity" to apply these requirements to DC schemes generally by 2027.
• Addressing the tax treatment of transfers from collective money purchase schemes that are winding-up under legislation to be included in the Finance (No 2) Bill 2024. Once enacted, consequential changes to the authorised payment rules made under the Finance Act 2004 will be made in secondary legislation. The measure will have effect from the date when Royal Assent is granted to the Finance (No 2) Bill 2024.
• Exploring the introduction of a lifetime pension provider model for pension savers. The Chancellor confirmed the Government “remains committed” in the long term to exploring the lifetime provider model for individuals becoming members of DC schemes. The call for evidence closed on January 24, 2024, and no response has yet been published.
• The ISA savings allowances are to remain the same for the 2024/25 tax year. However, a new British ISA limit of £5,000, in addition to the current £20,000 is being introduced, for an investment that is made into UK listed companies. Full details are still being finalised.

The Chancellor also confirmed that the Government remains committed to the triple lock for the State pension. The Budget speech was quiet on the DB pension front, with the biggest announcements made in this sphere in last year’s Autumn Statement. These were a commitment to establishing a public sector consolidator and a reduction in tax on accessed scheme surplus from 35 per cent to 25 per cent with effect from April 6, 2024.