Eeyore must wake up to pension issue

FOR personal finance aficionados, last Monday’s Budget was a bit of a damp squib. More a question of spend, spend and spend rather than encourage us to save, save and save. In some ways, more Red Labour than true Blue.

Of course, it was great news that Eeyore (sorry, Philip Hammond) announced he would be delivering early on a Conservative promise to raise the basic personal allowance and the starting point for higher rate tax to £12,000 and £50,000 respectively – next April instead of spring 2020.

But it was a cheery story somewhat tarnished 24 hours later when Royal London’s Steve Webb (a former Minister) announced he had found something in the Budget small print the Chancellor had failed to mention. Namely, that an increase in the upper earnings limit for National Insurance contributions to £50,000 would wipe out nearly half of the income tax gains for higher rate taxpayers. Eagleeyed Webb, sneaky Eeyore.

For long-term savers, the Budget was altogether unexciting although many will be relieved that Hammond left pensions well alone.

So, no axeing of higher rate relief on contributions, no cutback in the £40,000 annual allowance on contributions and no extension of the reduced allowance for additional rate taxpayers.

Given the mountains of speculation on threatened pension cutbacks that now occur ahead of every Budget and Spring (previously Autumn) Statement, surely it is time for the Government to come clean and give some clarity on its long-term intentions towards pension tax relief. It is the very least longterm savers deserve as they plan how to build wealth that will last them a lifetime.

It is a travesty that a Treasury consultation on the future of pension tax relief was launched more than three years ago – ridiculously called ‘Strengthening The Incentive To Save’ – but then went nowhere despite 450 responses from individuals, pension providers and think-tanks.

Yes, a summary report was published in March 2016 but it has never been acted on, left to gather dust. One of the key findings was the need for a ‘lasting settlement for the pensions system’. Hammond has yet to address that key issue – and he should do so as a matter of urgency once the Brexit issue has been put to bed. ALTHOUGH the £900 million of business rates relief given to small retailers by Hammond was criticised by some for being too little, too late to save the high street, it was a step in the right direction.

One of the connected reasons for many high streets sinking into decline is the wholesale withdrawal of banks from our towns and villages. The closure of the last bank in a community is often a body blow from which some are unable to recover.

While banks argue most branches no longer pay their way and that customers prefer the convenience of internet banking, that is not the experience of Coventry Building Society. Last week, in the aftermath of the Budget, I met up with Mark Parsons, its chief executive. He says that so far this year, more money (new savings balances) has come through the doors of its 70 branches than via the post or internet.

There are a number of reasons. For a start, it does not encourage online savers through preferential rates. All its savings accounts can be operated according to what best suits the customer. Secondly, it is spending serious money on making its branches as welcoming as possible.

That means staffing them with people who know the society’s products inside out. It also means no security screens and when customers demand it, rooms where they can talk about their finances in private. Branches are also encouraged to support local charities.

Finally, there is an emphasis on providing a duty of care to all customers who come through its doors. Certainly, what happened to Alzheimer’s sufferer Marguerite Hamnell at her local Barclays branch (see page 94) would never have taken place at the Coventry. The Coventrys of this world are helping keep our communities open for business – something we passionately support.

It is time for the Government to come clean and give clarity on pension tax relief