What did the Spring Statement 2022 mean for pensions? 

It has been a little over a week since the Chancellor’s Spring Statement 2022, allowing enough time for the dust to settle and Britons to process what was announced. 

Indeed, within the context of skyrocketing inflation and soaring energy prices, Britons were expecting some form of assistance to help them with the cost of living. And Mr Sunak did offer some assistance to support vulnerable households in tackling their mounting bills. 

Prior to the statement, hope was high that similar support would be offered to pensioners. 

Indeed, on Tuesday 22nd March, the day before the Spring Statement, it was announced that the triple lock would return in the financial year 2023/24. Further, the Conservative Party committed to keeping the triple lock in place for the rest of parliament. And whilst this will have come as welcome news to pensioners, given the current economic situation, it was predicted that Mr Sunak would announce temporary measures to bridge the financial gap for retirees until the triple lock was reinstated. 

However, this was not exactly the case. 

What was announced? 

It must first be acknowledged that pensions did not go unmentioned in the Spring Statement. Firstly, the Chancellor announced plans to reduce the basic rate of income tax from 20% to 19% by 2024. Of course, given that pensions are taxed like any other form of income, a reduction in tax bills – even a 1% change – will not be unwelcome news. 

Another notable point was that, from April 2022, the state pension will increase by 3.1%. This was admittedly announced in the Autumn Budget 2021, but the Chancellor confirmed that this would be the case in the Spring Statement. However, given that the current rate of inflation sits at a thirty-year high of 6.2%, this increase is unlikely to go as far as the government had hoped. 

Unchanged policies

What many Britons will have noticed, however, is that the Spring Statement did not make any mention of the annual allowance. This allowance stents the total amount an individual, their employer, or any third-party contributor can pay into a pension in any given tax year. Following the Statement, the allowance remains at £40,000, or 100% of one’s earnings (whichever is the lowest value). This could prove problematic, particularly for higher-earning individuals who might want to increase their pension contributions to ensure their pot holds its value against inflation. 

Similarly, the Lifetime Allowance freeze remains unchanged; this means that Britons are currently limited to saving £1,073,100 into their pension throughout their life. Of course, this is still a significant value; however, given the current inflation rate, this prohibits many people from saving more to ensure they can afford a comfortable retirement later down the line. 

What can Britons do? 

Following the Spring Statement, many Britons, both at- and pre-retirement, will likely be concerned about how they can best manage their finances to ensure they can secure their desired retirement outcome. 

Admittedly, the current cost-of-living crisis has complicated matters. However, it is important for individuals to remember that there are still options available to them – and the best way to discover such opportunities is to seek independent financial advice. 

The team of independent financial advisers at My Pension Expert are on hand to help people explore their pension planning options, as well as reassess sources of retirement income for retirees. They assess individuals’ current financial situation, their retirement goals, and the wider economic climate and create a tailored strategy to help them achieve, or indeed maintain, their desired outcome. 

Many savers and retirees will have hoped that the Chancellor would use the Spring Statement to offer them a financial lifeline throughout this testing economic period – and will have been disappointed that this was not the case. However, they must remember that options are still available. Independent financial advisers, like the team at My Pension Expert, are on hand to ensure people’s money is working as hard as possible and regain control of their retirement finances.