What Does Hunt’s Autumn Statement Mean For Your UK Pension?

21 November, 2022

The Autumn Statement delivered by Chancellor Jeremy Hunt on 17 November provided a near complete reversal of the calamitous budget presented by Truss/Kwarteng in their September “mini-budget”. Hunt’s budget was a relief to the markets as he sought to restore stability by announcing tax rises and spending cuts to raise £25 billion for UK coffers annually.

For current and future retires the budget was relatively quiet and, in fact, provided some welcome news on several fronts including:

• Lifetime Allowance (LTA): no plan to continue freezing the UK’s LTA past 2026 was announced. The LTA was frozen in 2021 at its existing level of £1,073,100 until April 2026 at the earliest. A prolonged period of no inflationary increases means more and more clients could face LTA charges.
• Reinstating the State Pension triple lock: reinstating the government’s commitment to the triple lock so that the State Pension will rise by over 10% from April 2023. UK pensioners only received a 3.1% increase in their State Pensions in April 2022 as the triple lock was suspended following an irregular rise in earnings following the impacts of Covid-19. As a result, pensioners lost out by over 5% last April as average earnings had increased by 8.3% and inflation was running at 9%. The triple lock is a commitment to raise the State Pension annually by the higher of average earnings, the consumer prices index (CPI) or 2.5 per cent.

Examples of some of the so-called stealth taxes on individuals include a freezing of income tax thresholds until 2028. This means the £12,570 personal allowance will be frozen for a further two years until April 2028. With the expectation that inflation will remain elevated for some time, the fiscal drag caused by freezing allowances is expected to bring in £1.260m in additional taxes by 2027/28.