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An overview with Ben Cowley

The Autumn Statement - Our view

Ben Cowley, 24 November 2016

Chancellor Phillip Hammond yesterday delivered his first Autumn Statement. It also turned out to be his last as he moves the budget to Autumn from next year. In a speech that contained few surprises, he admitted that the government would fail to meet the borrowing targets of the previous Chancellor. He also delivered the news that the Office for Budget Responsibility (OBR) had downgraded UK economic growth for 2017 from 2.2% to 1.4%.

But what were the key takeaways for investors and savers?

Money purchase annual allowance slashed

In unwelcome news for pensioners, the annual amount that can be saved tax-free into a pension - once you've already accessed some of your pension - has been reduced from £10,000 to £4,000. The government said it "does not consider that earners aged 55 and over should be able to enjoy double pension tax relief, such as relief on recycled pension savings".

Annual allowance and lifetime allowance unchanged

Sometimes no news is good news and that's the case with the amount that can be saved into a pension each year tax-free. The 'annual allowance' remains unchanged at £40,000. Similarly, the lifetime allowance stays unchanged at £1 million. We believe that a pension is still one of the best ways to save for the future.

The 'triple lock' remains in place - for now

This legislation ensures that state pension annual payouts are protected against inflation. The Chancellor chose not to tamper with it. Many though believe the triple lock is unsustainable and it remains to be seen how much longer the government can guarantee this increase.

Individual Savings Accounts (ISAs)

The government confirmed that the annual subscription limit for the ISA will increase from £15,240 to £20,000 from 6 April 2017. The Junior ISA and Child Trust Fund limit will increase from £4,080 to £4,128 from 6 April 2017.

A new NS&I savings bond to be introduced at the next budget

The Chancellor announced a new savings bond through National Savings & Investments> It is intended 'to help savers in a low interest rate environment'. But with a maximum investment limit of £3,000 it looks unlikely to offer much solace to many savers. And with its return of 2.2% it is unlikely to hold its own against rising inflation, spurred as it has been by Brexit uncertainty.

So what does all this mean for you?

Against a pessimistic backdrop of low growth, we believe that having a carefully plotted financial plan, executed at the best possible price is invaluable. With professional independent financial advice, savers and investors can take advantage of the opportunities that arise in a low growth environment. Ultimately, this will give them the best chance of reaching their financial goals and achieving the lifestyle in retirement that they've worked hard for.

Give yourself the best possible future

If you're ready to get your financial future in order, speak to one of our advisers for a no-obligation chat on 0333 241 9900 or book an appointment and we'll call you back.


Categories: Investment Insights

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