More in this section

The Chancellor backs savers for homes and retirement

He said it four times, so we can only assume he meant it.

This was, he stressed, a Budget for the Next Generation.
He wants to make our children slim and fit by introducing a levy on sugary drinks and doubling the amount of cash available to primary schools for sports. And he wants to provide more help for those struggling with savings for a home and/or their retirement and so extended the ever-popular ISA scheme.

Simultaneously, he continued his assault on the historic orthodoxy of the pension regime.
In doing so, he will have caused a great deal of chin-scratching in the board rooms of the pensions industry up and down the country. But there was a surprise in a Budget that was otherwise more widely leaked than a duck with Alopecia.

Pensions are too complicated, he said and he wants to make them easier. Excellent news all round but the potential repercussions for those who are already investing in a pension, especially those who have been required to get into auto-enrolled workplace schemes remain unclear.

What did he do for savers, exactly:
• Raised the maximum annual limit for ISA saving to £20,000 for all savers from April 2017.
• Introduced a new Lifetime ISA into which the Government will add £1 for every £4 saved each year up to the age of 50.
• Said the recently-introduced Help to Buy ISA can be rolled into the new Lifetime ISA.
• Said there will be no distinction whether savers want to raise funds for a home or for retirement.
• Raised personal tax allowance for nil rate to £11,500.
• Raised higher-rate tax threshold to £45,000 from next year.
• Introduced a new state-backed savings scheme for low-paid workers worth up to £1200 over four years. 

As ever with Budgets the devil is in the detail and we are not yet to be told exactly what the limits for this new product will be and there will be other questions in those board rooms. These will include: What exactly will happen to the Help-to Buy Isa? What about existing pensions schemes such as the compulsory auto-enrolment? What will happen with the over-lap on tax-efficient savings? Even: “What exactly is the future for pensions now?”
And quite possibly: “How do we compete when the Government is offering effectively a 25 per cent interest rate on its savings products?”

Still, it’s all good news and we at the Family Building Society welcome any measure which gives help to the struggling younger generation get their foot over their first threshold. And by the way he also froze duty on beer, cider and Scotch whisky.

Trebles all round then.

By Steve McDowell

comments powered by Disqus
Family Building Society
Ebbisham House
30 Church Street
Surrey KT17 4NL
Follow Us