Spring Budget 2024

The Chancellor of the Exchequer Jeremy Hunt has today delivered the government’s Spring Statement, in what was billed as a “budget for long term growth”. Below, our experts dive deeper into the announcements, giving their opinion on what impact they could have on the pensions industry and employers.

Plans to encourage pension funds to invest more in British shares

Matt Tickle, Partner and Chief Investment Officer

"The British ISA offers retail investors an impressive tax incentive to invest in London-listed shares, but the approach with institutional investors is more stick than carrot; an expectation with no incentive, and a threat of 'further action' if UK equity allocations don't increase.

"Given the poor performance of the FTSE all-share compared to global equities since 2010, and combined with the chancellor's focus on returns and value, DC pension schemes are being put into a remarkably difficult position. It's a rock and a hard place; returns for members versus a political push for a cash injection into the country. What's more, the UK market is heavily weighted towards oil and gas - further investment into UK equities could disrupt schemes' existing sustainable investment strategies."

"Pension schemes will not thank Mr Hunt for his announcements today. Their responsibility must be to their members, not changing with the winds of government policy or party. But with other changes on the horizon and regulatory pressure coming from all angles, there are some tough months ahead."

Increasing the threshold of the High Income Child Benefit Charge

Melissa Blissett, Senior Consultant and Pay Gap Analytics Lead

"The chancellor's extension of the threshold of the High Income Child Benefit Charge, combined with the previously announced increase in government-funded 'free' childcare, should result in more women looking to return to work, and more working women increasing their hours or moving full-time. With International Women's Day on Friday, firms have an opportunity to go beyond the Instagram posts and hashtags.

"It is the perfect moment to conduct a thorough review of the workplace - is the working structure, benefits package, remuneration, and work designed to attract and retain female talent? Are women able to hold roles with greater responsibility, and in turn higher pay?

“There is a pool of productivity sat waiting to be tapped if more women could fully engage at work - it is the responsibility of employers to harness that, and in turn reduce their gender pay gap, improve team performance, and ultimately boost their bottom line." 

The continuation of the Lifetime Provider Model, otherwise known as “Pots for Life”

Martin Willis, Employee Consulting Partner

“The pensions industry was eagerly awaiting an update on the Lifetime Provider Model - or 'pots for life'. The chancellor has given us the bare minimum - a sprinkling of breadcrumbs in an already restrained Budget.
 
"The government remains committed to exploring the 'pot for life' model, which would necessitate a massive upheaval to our pensions system. But it must stay committed to protecting and delivering value for UK pension savers in doing so. Without a considered roll-out and regulation, there is a very real risk that the model could create a rift in the pensions market - seeing the wealthy and confident benefitting over those with lower levels of financial means, literacy, and engagement.
 
"With the results of the call for evidence on the change due to be published soon - and expected to be pretty negative - the government must work with the industry, not against it. We are all trying to create the best outcomes for pension savers, but more work needs to be done before the pots for life proposal is ready to float to the electorate, and it must be one of several reforms. An increase to auto-enrolment contribution levels, a reduction of the minimum AE income threshold, and specific pushes to close the gender and disability pensions gap must be just as much of a priority."