But WOW. I think that was the first budget for financial planners.
For years I’ve been banging the same drum – the one about the need to utilise ISAs and pensions in tandem for retirement planning. A strategy seemingly now endorsed by the Chancellor of the Exchequer. In his budget speech yesterday (19th March 2014) he unveiled wave after wave of changes that will benefit savers. Two of them particularly caught my eye…
Firstly – ISAs. Cash ISAs and stocks and shares ISAs are getting a makeover. Actually they’re getting married, joined together into a shiny New ISA (NISA). And there are shiny new limits too. From 1st July 2014 the annual ISA allowance will increase to £15,000 per annum.
That’s going to mean some very different conversations around cash flow projections for Proposito’s clients as we factor in a step change increase in the ISA allowance.
But if this was a meal the ISA news was just a starter. For the main course the Chancellor decided to serve up a heavy weight dish of pensions. The changes came thick and fast. I actually had to re-watch this part of the Chancellor’s speech again on the BBC’s iPlayer straight after just to make sure I hadn’t missed anything. The implications are enormous…
So from 27th March 2014 (that’s next week):
- Amount of guaranteed pension income to access flexible drawdown reduced from £20,000 to 12,000.
- An increased capped drawdown limit, up from 120% of GAD to 150% of GAD.
- An increase in the size of a single pension pot that can be taken as a lump sum – up from £2,000 to £10,000. There’s also an increase of the number of such pots that can be accessed too – up from two to three.
- There’s an increase in the overall size of pension pots that can be accessed as a lump sum, up from £18,000 to £30,000.
The changes are huge and there’s more to come with the announcement of a new Pensions Bill to enshrine changes in law.
If the New ISA was going to give rise to different conversations the pension changes are going to lift the lid on a whole new can of worms (in a good way). We envisage having some very different conversations about our clients’ financial futures as a result of the planning opportunities announced today and the almost limitless opportunities they present.
If you think that you’d like to know more about the conversations we’re having with our clients then why not get in touch and get things moving.