Even the ‘transitional protection’ should send a cold shiver down the spine of most advisers, who’ll have to explain to confused clients how pension saving limits operate.
After nine changes to allowances in nine years, we’ve seen the lifetime allowance yo-yo up to £1.8m before falling back from whence it came. This new protection will make a total of six in use, joining primary protection, enhanced protection, fixed protections 2012 and 2014, and individual protection.
Horrendous complexity; a clumsy tax raid; ceilings on the amounts you can save which punish the compounding benefits of starting earlier. There is no redeeming feature to this policy.
And that is what this is: pure politics. It’s worked well for Mr Osborne in the past, such as when he sought to take the steam out of a Labour charge, following a pledge to introduce a ‘mansion tax’ with a far more elegant progressive reform of Stamp Duty at the Autumn Statement.
Or at this very Budget, when in a feat of political prestidigitation he claimed improvements in borrowing and growth figures would be used to pay down debt, while turning a previously pledged £23bn surplus into a £7bn surplus; with even this achieved in part through £13bn of asset sales.
With a wave of his Budget box he therefore changed a public service time warp to come, from a journey to the stark 1930s to the much more genial 2000s. Fair enough - and ultimately the right call.
My issue with the lifetime allowance policy is that unlike these measures, it doesn’t fit the narrative and actually undermines what the government and industry are trying to achieve. It was no less than the ‘gimmick’ George promised we wouldn’t get.
ashley.wassall@ft.com
