MONEYFACTS on Budget 2015 - Help to Buy ISA, £1000 Savings Allowance, Pensions Freedom...

By: MoneyFacts

Sylvia Waycot, Editor at Moneyfacts.co.uk, comments:

“This is a great budget for savers. After years of being left out of the cold they can finally enjoy the warmth of being under the Chancellor’s new roof.”

Help-to-buy ISA

Sylvia Waycot, Editor at Moneyfacts.co.uk, comments:

“Many young people have almost given up on the hope of owning their own home because the deposits are so high. This will be excellent news for this demographic, who will once again have the opportunity of getting on the housing ladder.”

Flexible ISA

Sylvia Waycot, Editor at Moneyfacts.co.uk, comments:

“The ability to withdraw money from an ISA and repay it back at a later date lays to rest one of the key frustrations of ISA saving.”

Personal Savings Allowance - £1,000 tax free

Sylvia Waycot, Editor at Moneyfacts.co.uk, comments:

“We finally have one rule that gives all savers equal opportunities and addresses the unfairness of having to pay tax on money that has already had a share taken by the taxman.”

Lifetime Allowance reduced to £1 million

Richard Eagling, Head of Pensions at Moneyfacts.co.uk, comments:

“Yet again the temptation to tinker with pensions has been too difficult for the Government to resist. The Lifetime Allowance has now been cut from £1.8 million in 2011/12 to £1 million. Although it is estimated that fewer than 4% of pension savers currently approaching retirement will be affected, constantly moving the pension goalposts does little to aid long-term retirement planning and undermines attempts to restore confidence in pensions. Given the radical shake-up to the pensions landscape set to be introduced from April with the onset of greater pension freedoms, it would have been wise to resist any further tinkering. The announcement that the Lifetime Allowance will be indexed in the future to protect against inflation is at least some consolation, although this will not come into effect until 2018.”

Extension of pension freedoms for annuitants

Richard Eagling, Head of Pensions at Moneyfacts.co.uk, comments:

“It seems that the Government is serious in its desire to explore the possibility of introducing annuity recycling, a change that could come into effect as early as next year if its consultation goes well. However, it is still very early days for the concept and there are numerous questions that need to be answered satisfactorily; in particular, how will existing annuities be valued fairly when they are sold? There is a real nervousness that introducing a second-hand annuity market could see those already receiving low annuity rates hit a second time and forfeit even more of their retirement income when they sell their existing plan. Early estimates have suggested that those selling an annuity may only get back a maximum of around 70% of the value of their annuity, in which case it is unlikely to be an appealing option for many individuals. While the desire to extend pension freedoms to current annuitants is commendable, the practicalities make this a potential minefield and the Government will need to tread carefully to ensure that retirees receive as much value from their existing annuities as possible.”

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