UK Pensions - Autumn Budget 2021 - Implications for pension schemes

The Chancellor of the Exchequer, Rishi Sunak, has delivered the Government's Autumn Budget for 2021. The pensions-related Budget announcements are limited, but include the following:

• Charge cap: The Government will consult before the end of the year on further changes to the charge cap for defined contribution (DC) auto-enrolment pension schemes. This will consider amendments to the scope of the cap “to better accommodate well-designed performance fees and enable investments into the UK’s most productive assets, while continuing to protect savers”. The Government will also continue wider policy work to understand and remove barriers to illiquid investment.
• Pensions tax relief administration: The Government has published a response to its July 2020 call for evidence on the operation of the two main methods of administering pensions tax relief (net pay and relief at source) and what improvements might be made. Our earlier client alert explains the background to this issue. The response confirms that low earners making contributions to net pay schemes from 2024-25 will be eligible to claim a top-up. The intention is that these top-ups will help to better align outcomes with equivalent savers in relief at source schemes. The Government has also confirmed that it intends to modernise the administration of pensions tax relief.

For more information, please speak to your usual Linklaters contact.