Commenting on the lack of amends to the pensions lifetime allowance, Hannah English, Senior DC Consultant, Hymans Robertson comments:

“We recognise that the new Government has limited room to manoeuvre in raising additional taxation at this challenging time, but the lack of update in today’s Autumn Statement around the impact of pensions on certain industries – particularly the NHS -  is short sighted. Past experience have shown that raising taxes via a lack of focus on long-term pension policies, can led to extreme political consequences.

“Maintaining the lifetime allowance freeze to 2025/26 will result in a real-terms reduction of c60% or c£1.1m in the lifetime allowance since it peaked at £1.8m in 2011. For higher earners paying tax on pension savings above the lifetime allowance, is equivalent to c£275k in additional tax payments to the government. The current pension taxation regime is not fit-for-purchase and too open to tinkering and editing by the Treasury without longer term consideration. We would welcome the Government to review the pension taxation regime to remove the existing complications, encourage pension saving and distribute tax-relief more effectively – and would like to see this at the top of the Pension Ministers to-do list.”

Commenting on the retention of triple lock, Chris Noon, Partner, Hymans Robertson comments:

“There is welcome relief that the Government has stuck to its manifesto promise and retained the triple lock providing pensions with long-term protection. With the cost of living crisis and rising inflation set to continue, too many pensioners continue to live on extremely low incomes leading to evermore worry for many. The UK State Pension is one of the worst in the OECD and is the primary reason that the UK has such high levels of pensioner poverty. The triple lock provides long-term mechanism for increasing State Pension relative to other wealthy countries and must be retained for the long-term.” 

Commenting on the Government response to Solvency II reforms, Nick Ford, Head of Risk & Capital in Hymans Robertson’s Insurance and Financial Services, said:

“These changes will, on the whole, be welcomed by the insurance industry. In particular, the requirement for highly predictable cashflows is a great opportunity to increase the types of assets that can be invested in without unnecessary and complicated internal securitisation processes, which introduce operational cost and risk. However, it still remains to be seen how the PRA will implement these changes. Treasury is clear that the PRA will be able to reduce the Matching Adjustment that can be achieved on assets which do not have fixed cashflows. The extent of reduction and the mechanism used will be key to understanding the financial and operational impacts – and therefore the extent of investment in these broader types of assets.

“The Risk Margin reduction will also be welcomed. However, the impact it will have for each insurer is still uncertain until we see how the PRA will implement it. Some industry participants have been noting that recent economic conditions have reduced the Risk Margin by as much as 50%. Depending on how HMT’s impact has been calculated, this reduction may not be as beneficial as the 60% - 70% quoted under previous economic conditions.”

Additionally, Michael Abramson, Partner at Hymans Robertson in Risk Transfer, said:

“These reforms are likely to modestly reduce overall capital requirements for bulk annuity insurers, as well as broadening the assets that they can use to invest in. While a reduction in capital requirements may mean less security for policyholders, the areas that have been addressed are ones that arguably were difficult to justify to begin with.

“The reforms also set out some additional powers for the PRA that should serve to manage any potential risks associated with a relaxation in capital requirements. Overall, the changes may help to stimulate innovation in a buy-in and buy-out market where demand is expected to grow significantly, as well as encourage a slight improvement in pricing, all within a framework that still provides a high level of security for pension schemes and their members.”