The Autumn Statement 2023, from current Chancellor of the Exchequer, Jeremy Hunt claimed to be ambitious on many fronts. As ever, after a brief overview, I’ll focus my attention on what it means to pensions and savings.
Autumn Statement 2023 Overview
Hunt continued to freeze income tax personal allowances and rate thresholds until 2028. This is the biggest contributor to the overall tax burden on individuals, and it continues to be the highest tax burden on record. This ‘fiscal drag‘ will raise significant amounts of tax, owing to high wage inflation dragging tax payers into higher tax rates.
It did, however mean he had some spare cash to spend. The Autumn Statement gave a small portion of this back to individual taxpayers in the form of national insurance contribution cuts. Also, to businesses via capital allowances, by making ‘full expensing’ permanent.
Impact of Autumn Statement on Savings and Pensions
It’s fair to say that there were fewer initiatives aimed solely at this sector, than there were in the 2023 Spring Budget.
Here are the key points of the Autumn Statement 2023 in relation to pensions and savings, in summary:
The so-called, ‘triple lock’ on the State Pension is maintained for 2024. This means a full State Pension of £11,502.40 in 2024, a rise of 8.5%, from April 24.
He opened the door, but did nothing specific about a single ‘pension pot for life’, which is apparently “on the way”. This will, it’s hoped enable easy consolidation of multiple pensions held by individuals. Next step is ‘consultation’, don’t hold your breath.
- Previous plans to tax inherited pensions have been scrapped.
Tax Burden and Inflation Have Most Effect on Savers
So, with little by way of fiscal incentive directed at saving, the Chancellor is reliant on the economic health of the nation to drive wealth creation and saving. He announced (repeatedly) that this was an ‘Autumn Budget for Growth’. However the OBR (Office of Budget Responsibility) actually showed growth projections reducing as a result of the Autumn Statement 2023.
Much was also made of the fact that inflation is less than half the rate it was at the beginning of the year. But it’s still approximately double the Bank of England’s target.
These 2 factors make saving harder as ordinary people continue to feel squeezed. In the same week as the Autumn Statement, Ofgem announced a new price cap for domestic fuel that mean gas and electricity bills will rise again from January.
The economy continues to be in a tough place and it’s really difficult to encourage some people to save adequately for their futures. I’ll continue to help people as much as I can to build their pensions and to maintain a long term perspective. If you need help, or are concerned about to to manage your savings, please feel free to reach out and contact me. I’m here to help.