View more on these topics

What the summer 2015 Budget really means for you and your employees

The introduction of ground-breaking pension freedoms in April 2015 has created some uncertainty for employees and employers alike, and they are looking for help. With further changed announced in the summer Budget, employees really need help to understand how the changes affect them.

So what are the changes?

  • The lifetime allowance will decrease from £1.25m to £1m
  • Pension freedoms will be extended to those who have already bought an annuity
  • The annual allowance will be cut for high earners from 6 April 2016. The standard £40,000 will be reduced by £1 for every £2 over £150,000 in a tax year. But income earned doesn’t just include salary; it includes other taxable income plus personal pension contributions paid gross to an occupational scheme and the value of employer contributions
  • Pension input periods are changing, which may give employees extra allowance this year

One of the vital points for employers to understand is that everyone can be affected by these changes, not just high earners. For example, what happens when an employee is paid a large bonus or is made redundant, and their pay packet pushes them into the new annual allowance rules? Who is going to warn them and help them understand what to do? HR will probably be expected to take an active role in helping employees prepare for any issues that might arise.

The new pension freedoms have left employees wondering what to do with their savings when the time comes, and some may be thinking that a whole heap of cash would be just the ticket. But are they aware of the tax implications, as emergency tax codes can apply? Have they thought about what happens when the money runs out? How do employers help their employees get the retirement they want for the whole of their retirement? It’s not enough to provide employees with communications, because – let’s be honest – a lot of them don’t read what they’re sent, and some just don’t understand so they ignore it. Well we’ve all done that. Employees need to get engaged with their pensions to really understand how these changes affect them, and the most important thing they need is a plan.

In order to get a plan, you have to know what you’ve got, what you’ll need and when. To provide employees with this knowledge, they need education: face to face, straightforward and relevant education. Education isn’t designed to provide exact solutions for each and every employee, but should inform them of the issues they need to consider, what they might need in terms of professional advice, and help them understand the documentation they are being sent. This support from the business will result in happier, more prepared employees.



Financial services heavyweights join PRA board

The Bank of England has recruited two financial services heavyweights to the board of the Prudential Regulation Authority. Former Clydesdale & Yorkshire Banks chief executive David Thorburn and outgoing Scottish Widows deputy chairman Norval Bryson will join the board from 1 September. Thorburn was previously chairman of CBI Scotland and president of the Chartered Institute […]

Steve Rogers HML

The return of securitisation and how it impacts brokers

While the last couple of years have been relatively quiet in terms of overall volumes of securitisations, a number of lenders are still actively issuing deals, with regular transactions from Paragon, Kensington Mortgages, Mars Capital, Skipton Building Society, Principality, Santander and Precise Mortgages. There have also been deals from Bluestone Mortgages (formerly Basinghall Finance), CarVal […]

FCA logo new 3 620x430

Networks hit back over FCA criticism

Mortgage networks have hit back after the FCA raised concerns about a lack of quality control over advice. Earlier this month, the regulator’s post-MMR thematic review of advice and distribution found in 59 per cent of cases from lenders and brokers that suitable advice was deemed to have been given, with just 3 per cent […]


Court of Appeal overturns £261m Northern Rock redress case

The Court of Appeal has reversed a decision that that would have seen 43,000 Northern Rock borrowers paid total compensation of £261m. In December, the High Court ruled that Northern Rock Asset Management should pay an average of £6,000 in refunded interest to borrowers who took out the infamous “Together Mortgage”. This allowed consumers to […]


News and expert analysis straight to your inbox

Sign up

Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now