Following today’s Autumn Statement, Richard Parkin, the head of retirement at Fidelity International, highlighted an aspect of the announcement that may have gone under the radar.
He said: “While changes to the timing of auto-enrolment may look like giving employers and consumers a break, it does appear to raise £820m of additional tax over the Parliament for the Chancellor.
“We can assume that this comes largely from income tax receipts on the money that would have gone into pensions. As always, what George giveth, he also taketh away.”
Mr Osborne also made a statement on the new £155 Single Tier State Pension.
He said that this was “higher than the current means-tested benefit for the lowest income pensioners in our society” and “another example of progressive government in action.”
But Mr Parkin suggested that as many as 80% in future years may miss out on the full amount.
“At just over £155, the Single Tier State Pension is undoubtedly a generous deal however, it is important that we recognise that not everybody will get this.
“People who, at some point in their working life were “contracted out” of the State Second Pension in return for paying less National Insurance will find that this impacts adversely on their State Pension entitlement.
“Figures from the DWP show that of the people reaching State Pension Age in the next 20 years, 80% will have been contracted out at some point. Consumers should look to see what they will actually get by filling in form BR19 from the Department for Work and Pensions to get a full statement of their benefits.”