Pensions
On pensions, the Spring Budget 2024 builds on previous policies contained in the Mansion House reforms and the 2023 Autumn Statement. These policies had included measures to encourage more investment by pension schemes and others into UK equities. To measure whether these policies are having the desired impact, the government plans to require defined contribution funds to publicly disclose their asset allocations, including UK equities. There will be equivalent requirements imposed on Local Government Pension Schemes. If the published data does not show UK equity allocations are increasing, the government will review what further action might be required.
A separate public disclosure requirement is planned for contract-based Defined Contribution default funds. The requirement would be for the publication of net investment returns. Under the proposed changes, schemes would also be required to compare their performance and costs against two schemes managing over £10bn. These measures are all part of the continuing drive to consolidate underperforming smaller schemes into larger better performing funds, and will be included in the FCA’s spring ‘Value for Money’ consultation.
Finally, the government has confirmed in the Spring Budget 2024 that it remains committed to exploring a Lifetime Provider Model for defined contribution pension schemes. This model was mooted in the 2023 Autumn Statement, and would allow employees to select a pension scheme where their employer would pay pension contributions. The aim of the model is to make it more likely that an employee would have one pension pot for life avoiding the inefficiencies linked to having multiple small pots from multiple different employments. The Spring Budget statement indicates that the government is undertaking continued analysis and engagement on the proposed model.
ISAs
The Spring Budget 2024 announced that the adult ISA annual subscription limit for 2024/2025 will remain unchanged at £20,000 and the annual subscription limits for Child Trust Funds and for Junior ISAs for 2024/2025 will remain unchanged at £9,000.
However, the Chancellor also announced a proposal to introduce a new UK ISA with its own additional allowance of £5,000 a year. A consultation was published alongside the Budget and responses to this consultation should be sent to HM Treasury by 6 June 2024.
As previously announced in the 2023 Autumn Statement, the government is looking to include certain fractional share contracts within the scope of ISA investments. The Spring Budget 2024 provided an update that the government is working to bring forward legislation by the end of the summer following detailed engagement with industry and the Financial Conduct Authority (FCA).
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.
Key contacts
If you have any questions, contact a member of the Pensions and investments team for assistance:
