Jamie Jenkins, Royal London’s Director of Policy, reacts to today’s Budget

Jamie Jenkins, Royal London’s Director of Policy, reacts to today’s Budget:

“The Chancellor’s Budget today was arguably the first he has delivered outside of a national emergency. He did make it clear that we can’t yet ‘draw a line under COVID’, and the opposition leader testing positive today was testament to that. Given we have already had a number of announcements this year, and certain details were well trailed this week, today’s speech didn’t include a lot of new information.

“Perhaps the most significant point for savers is that inflation is expected to rise further, averaging around 4% over the course of 2022. For people holding money in cash, this widens the gap further between the returns on their savings and the buying power of their capital. In short, it compounds the inflation risk they face. It will also increase the pressure on the Bank of England to raise interest rates, which would in turn make borrowing more expensive.

“On pensions, the Government has confirmed that it will address the problem for low earners in net pay schemes, with top ups to be paid from the 2024/25 tax year onwards. It will also look to simplify the operation of tax relief, but there were no significant changes to the structure or limits.

“The Government has also confirmed it will make changes to the operation of the pension charge cap to allow increased investment in illiquid assets. This is a positive step towards creating a framework for such investments, providing greater opportunity for people to make good long term returns on their pensions, while actively contributing to the sustainability of our environment.”