Budget countdown: Pension U-turn could be “political settler”

George Osborne’s U-turn on potential radical pension reforms could be a political settler as we approach a referendum on the EU according to a Nottingham taxation expert.

Simon Browning is tax partner at UHY Hacker Young in the city and believes that while scrapping pension changes is positive news, the announcement is intended to create certainty ahead of the referendum later this year.

He said: “The planned reform of the pensions system was one of the Chancellor’s more radical moves in recent months, which has been causing significant uncertainty as people look to plan for their futures.

“We could have seen an increase in red tape and administration for individuals and businesses who would have been forced to make changes to the way in which they structure their financial affairs, but thankfully this latest announcement confirms there won’t be any radical reforms.

“Speculation suggests that there were concerns about the potential knock on effect of mass withdrawals of funds, which together with the potential impact on political feelings ahead of the EU referendum in June, brings into question the timing of such significant change.

“For now at least there is valuable certainty in relation to pension savings and the associated tax reliefs – but what may be coming next gives us food for thought.

“The most recent statements made by the Chancellor have included surprises such as reforms on buy-to-let, so this announcement could be the softening of a bigger blow to come in the future.”