Pensions 2017: How Changes May Affect You
This year is likely to witness many changes that could affect your pensions, such as Brexit, a threat to tax relief and the change to the state pension age, but how could these changes affect your finances and in particular your pensions?
As an independent financial adviser in Nottingham and across the East Midlands, we work in partnership with our clients to ensure they have the most effective and efficient strategies in place to safeguard their retirement plans against such changes.
Negotiations for how Britain is to leave the EU is one of the biggest unknowns of the next few years and in particularly 2017, as this is when those changes are likely to become apparent. It is expected that pensions are likely to be affected post Brexit, it is anticipated that when we leave the EU the triple lock on state pensions could come under threat and the effect Brexit has on the stock market could cause private pensions to lose value.
Other changes to consider this year that could have an effect on your pensions is the threat to tax relief and the changes to the state pension age. To outline what this may mean for your finances let’s take a look at each change in more detail.
Post Brexit Pensions
While the value of the state pension is currently protected by the triple lock – which guarantees annual rises in the state pension by whatever is the highest of price inflation, average earnings growth or 2.5 per cent – it has been warned that the triple lock could come under pressure when Britain leaves the EU. If the triple lock is scrapped, those relying on their state pension as income for their retirement could take a big financial hit.
It is also thought if a stock market crash were to hit as a result of Brexit, many private pensions could lose value – leaving those near retirement little time to rebuild their finances. Expats receiving pensions abroad may also lose out if an exchange rate upheaval took place post Brexit.
Threat to Pension Tax Relief
Pension tax relief is thought to be under threat and while the Treasury has said it “has no plans to change” many believe that they are planning to cut back the tax free lump sum or restrict valuable tax reliefs in other ways. It is important to be aware of the possible threat to pension tax reliefs to ensure you plan your finances accordingly should such changes take place.
We always recommend seeking independent financial advice before making any changes to your finances, it is also good practice to review your finances regularly with your financial adviser to ensure you keep abreast with changes so you can react to them accordingly.
Rise in State Pension Age
The age at which women qualify for the state pension is set to rise from 60 to 65 by November 2018, with the exact date depending on the month you were born. Between October 2018 and October 2020, both men and women’s state pension age will increase to 66. Between 2026 and 2028, it will rise again to 67.
Ex-Confederation of British Industry boss John Cridland has been tasked with recommending increases beyond that point and the verdict on raising the age to 68 is due this spring. The rises in state pension age can mean for many that they will not have the financial security to be able to retire until they reach the later pension age.
At Castlegate, as an independent financial adviser in Nottingham and the surrounding areas, we can support you with all aspects of financial planning and wealth management to ensure you have the most effective and efficient strategies in place. As an independent financial adviser and firm of Chartered Financial Planners in Nottingham, we provide financial advice and recommended solutions sourced from the wider market which are tailored and bespoke to you and your unique personal circumstances.
If you are looking for an independent financial adviser in Nottingham or across the East Midlands to provide advice and guidance on finance planning and wealth management, please do not hesitate to get in touch to talk about the most appropriate investments and pensions for your personal circumstances and financial objectives.