Spring Budget 2023 – Royal London Podcast
Clare Moffat and some of our technical experts have recorded a podcast exploring their first thoughts on the 2023 Spring Budget. Find out more about the impact this could have on you and your clients.
It was an exciting budget for the pension’s world, with some unexpected changes announced. In our latest podcast, Clare Moffat is joined by Craig Muir and Fiona Hanrahan to look at the changes in relation to pensions, and Justin Corliss, who explores what this means for the public sector.
The standard annual allowance has been increased from £40,000 to £60,000. You’ll need to understand the impact that this will have and the potential for your clients to now pay in more to their pensions. This could be particularly useful for clients who are paying in larger contributions in the run-up to retirement, especially business owners who might not have paid in much to their pensions in the past, or those in public sector DB schemes who find their pension input amount is higher than that standard annual allowance. You may want to review what other savings your clients have and whether paying them into a pension may give them better outcomes now this allowance has increased.
For individual contributions, an increase in the annual allowance is only relevant if the client has the relevant earnings to support increased contributions, in order to get tax relief. This, combined with the lifetime allowance removal is welcomed news for anyone wanting to pay more into their pensions.
Money purchase annual allowance (MPAA)
The money purchase annual allowance (MPAA) will increase from £4,000 back up to £10,000 from 6 April 2023. There will now be clients who might want to pay more into their pension who may been discouraged from doing this previously, and they might could pay more now without having that tax charge apply. It’s worth looking at any of your clients who have flexibly accessed their pension and are still in employment. This could be beneficial for those who have had to access pensions due to the cost-of-living crisis, as well as employers struggling to retain workers in a tight labour market.