TISA response to the Autumn Budget
TISA, the cross-industry financial services membership body, today responded to the government’s budget announcement. TISA views the Budget as vital for a robust and innovative financial services framework that will deliver real, broad-based improvements in financial outcomes.
However, several concerns remain:
- TISA welcomes a consultation to review the pension charge cap on DC Default funds. The current cap represents a constraint to allowing consumers to invest in UK innovation and infrastructure. We see the consultation as an opportunity to make investing in a pension more tangible and worthy for consumers.
- The Autumn Budget also contained a commitment to further invest in digital technologies. The UK has an opportunity to be a digital innovation hub. TISA calls for further detail on these proposals to increase investment in government digital programmes such as a consumer digital ID that will break down barriers for consumers wishing to access savings and investment products.
- TISA are pleased to see a solution to the Net Pay Anomaly that is preventing low-paid workers from securing tax relief on their pension contributions, with the government looking to ‘top-up’ the pensions of people who do not reach the £12,570 tax threshold. This will save lower earners an average of £53 per annum. However, the implementation of this top-up scheme should be carefully considered. If it relies on people proactively claiming top-ups, there is a real risk of non-take-up.
Also, we are disappointed to see that these changes are only set to become effective in 2025/26 for contributions made the previous year, with seemingly no intention to backdate overpayments.
- TISA supports the announcement to invest £3.8bn in skills, an increase of 48%, and a new numeracy programme to improve maths skills for adults. TISA believes that this can be extended into financial education and budgeting skills. TISA is committed to increasing financial numeracy, and the TISA team were involved in the establishment of the Centre for Financial Capability, a new charity that will work to deliver skills and training to young people in the UK.
- For a third year in a row, there has been no increase in ISA limits. Lower limits on tax free savings as inflation rises alongside an increase in dividend tax will significantly impact savers. There has also been no increase in pension savings limits, which will further impact people who are saving for their future.
- The breaking of the state pension triple lock is also a significant concern. This year, the state pension will be increased by 3.1%, the rate of inflation in September 2021, instead of the increase in average wages due to a statistical anomaly caused by the pandemic. Inflation is set to rise further, meaning that pensions are seeing a further squeeze. The UK’s state pension already falls behind the OECD average and TISA calls on the Government to guarantee a return to the triple lock in 2023.
- Whilst not covered explicitly in the budget, TISA is concerned that consumers are going to be left without the required transparency on their social care cost obligations, following the Government’s significant policy statement. Consumers will enter retirement thinking there is an £86k cap to what they will need to pay for their social care, when in fact the fine print reveals their obligations are likely to be much higher (given what costs count and what costs don’t count towards the £86k cap). An awareness campaign is required to ensure consumers plan accordingly when approaching their retirement.
David Dalton-Brown, CEO at TISA, said: “TISA is pleased that a number of vital issues have been resolved in this Budget, and we would like to congratulate the Chancellor on making significant progress in a number of key areas for savers, such as the resolution of the Net Pay Anomaly.
An increase in skills investment, a commitment to an ambitious agenda on digitalisation and digital identities: all of these, contained in the Treasury Red Book, are vital steps to creating a robust, future-proof framework for the financial services industry and for consumers across the United Kingdom.
However, a number of issues remain, and we call on the Government to consider revising their position on ISA and pension savings limits. The Chancellor announced that this Budget would usher in an Age of Optimism. We call on the Treasury to consider a series of concrete proposals to benefit consumers and therefore ensure that all of us can look forward to the next decade with a positive financial outlook.”
-ENDS-
Contact:
Kuba Stawiski
Cicero/AMO
07856031906
kuba.stawiski@cicero-group.com
Notes for Editors
07856031906
The Investing and Saving Alliance (TISA) is a unique, rapidly growing membership organisation for UK financial services.
Our ambition is to improve the financial wellbeing of all UK consumers. We do this by focusing the convening the power of our broad industry membership base around the key issues to deliver practical solutionsand devise innovative, evidence-based strategic proposals for government, policy makers and regulators that address major consumer issues.
TISA membership is representative of all sectors of the financial services industry. We have over 200-member firms involved in the supply and distribution of savings, investment products and associated services, including the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, Fintech businesses, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.
As consumers, the financial services industry and the economy react to and recover from the effects of the pandemic, the importance of the three key pillars of work that TISA prioritises has never been more apparent:
- Strategic policy initiatives that influence policymakers regarding the financial wellbeing of UK consumers & thereby enhancing the environment within which the industry operates in the key areas of consumer guidance, retirement planning, later lifetime lending, vulnerable customers, financial education, savings and investments.
- TISA is recognised for the expert technical support provided to members on a range of operational and regulatory issues targeted at improving infrastructure and processes, establishing standards of good practice and the interpretation and implementation of new rules and regulations covering MiFID II, CASS, ESG/RSI, operational resilience, Cyber Risk, SM&CR and a range of other areas.
- Digital transformation initiatives that are driving ground-breaking innovation and the development of industry infrastructure for greater operational effectiveness and revenue promoting opportunity for firms. TISA has become a major industry delivery organisation for consumer focused, digital industry infrastructure initiatives – TISAtech (a digital marketplace that brings together financial institutions and FinTechs for greater collaboration and innovation) and TURN (TISA Universal Reporting Network – a digital platform providing a secure data exchange for financial services using blockchain technology) – alongside projects Digital ID and Open Savings & Investment. This reflects TISA’s commitment to open standards and independent governance.