Will your pension be raided in the Spring Budget?

spring budget

In the Spring budget of March 2014, the Chancellor George Osborne was praised for one of the most radical pension reforms in over 50 years. Previously you were forced to exchange your hard saved pension for a poor value income with an insurance company. But now, the public would be trusted to do whatever they like with their entire pension pot.

The new pension freedoms have been met with almost universal acclaim, though some sceptics believe the public may not resist squandering their entire pension on flash cars and holidays.

Find out how exposed your family are to a market downturn. Take the FREE test

Spring Budget to squeeze the middle classes

Fast forward 2 years, and the next Spring budget is due on 16 March 2016. And whilst the UK

PHYS01_Animated_Gif_2_MPUhas been praised for its welfare cuts and apparent austerity, speculation suggests that further cuts are required to contain, and ideally reduce, the national debt.

Rumours are mounting that the Spring Budget may deliver the biggest shock to pensions of all – but this time, not positively.

If Osborne continues to deliver budget surprises, then his most likely weapon of choice will be a reduction on the tax relief currently offered on UK pensions. The suggestion is that lower rate taxpayers won’t be affected as they’ll still receive a 20% top up on all their pension contributions. This equates to a £100 contribution being grossed up to £125.

Instead it’s the, already squeezed, middle classes who will be hit hardest. Currently, for every £100 a higher rate taxpayer puts into their pension, the Government tops up by 40% or £66. If the chancellor slashes this to a flat 20% for all, then the middle classes will lose £41 for every £100 they currently pay in.

There’s even the extreme option that the budget will cut ALL tax relief on pensions, and instead allow pensioners to take their whole pension-pot, tax free, after the age of 55. Currently they can take their entire pension, but only 25% is tax free. A basic rate tax payer saving £250/month for 25 years would lose out by £40,000 with no tax relief and a higher rate taxpayer £70,000.

How likely is this?

Unfortunately it’s very possible indeed. Firstly, the chancellor has previous form. He’s already attacked pension limits – reducing annual contribution caps to £40k and lifetime allowances to £1 million. So it certainly wouldn’t be the first time he astonishes the markets with his budget announcement.

He’s also under mounting pressure to eliminate the annual deficit (which recently rose to £8.2 billion), by the end of 2019. The UK national debt currently stands at over £1.6 trillion, but worryingly is growing at the rate of £5,170 per second.

With global markets under renewed pressure from ultra low oil prices and floundering Chinese stock markets, it may prove increasingly difficult to raise taxes. The next weapon in his armoury would be cuts to tax relief. The current pension relief costs the Government £34 billion a year, so this would be incredibly effective in an overnight reduction in Government outgoings.

The only hope is that Mr Osborne’s ambitions of becoming prime minister may prevent him from upsetting the core Conservative voters – the middle classes. Any raid on their tax relief could be seen as a huge betrayal to Tory values and ruin any chances he has of taking the helm.

New Call-to-action

Alternative Tax Relief?

Naturally if you want to add gold into your pension then the relief you’ll receive on that purchase will reduce in line with the new budget. However, adding gold bullion is just as tax-efficient as buying shares or bonds. If you use funds already within your pension (or sell another asset), then you would have already received the current level of tax relief, so won’t miss out. Rules may differ in the US with a Gold IRA.

Another alternative is to purchase tax-free gold coins outside of your pension. These coins are both VAT exempt and Capital Gains Tax free. Although there’s no tax relief on the purchase, these do offer the same tax efficiency as an ISA, but without the restrictive annual limits of an ISA.

Plus you can sell your tax-free coins any time you wish, unlike pension assets which are ‘locked up’ until the age of 55.

One thing’s for sure, if pension tax relief is reduced in the budget, many savers will start looking at alternative, safer havens for their cash, such as gold investment and property – pushing up the prices in both asset classes.

Insider's Guide to gold and silver

Tax-efficient precious metals

If you’re concerned about these possible changes and the continually evolving pension rules, then you should consider being tax efficient in other ways.

With the global economy and traditional equity markets taking a significant downturn in early 2016, precious metals could provide you with tax-efficient, market protection – but only if purchased correctly.

We are specialists in UK based, tax efficient precious metals. Our 4 main product categories are Silver, Tax free Gold, Pension Gold and Gold Savings – all of which have been specifically designed to maximise tax efficiency.


Infographic: Why We All Dream In Gold

Are We Attracted to Gold More Than Other Metals?

What is it about gold that we seem to love so much? Besides it being a great long term investment strategy, humans seem to idolise and worship gold like no other metal. Maybe not as much as people such as Goldfinger, but there is definitely an obsession there! So are we attracted to gold more than other metals?

Widespread use of gold in our society

Perhaps we may not notice it, but gold surrounds us in our society. From our gold-plated jewellery to gold stars or gold medals for achievements, gold is something that we desire to achieve or show off.

We see gold everywhere, especially in the coins and money that we use

It would seem that we are attracted to gold on two fronts. Firstly, there is a scientific factor behind our attraction. We are naturally attracted to more colourful, shiny objects and items, and gold easily falls into this category.

While we have an attraction to items such as silver, gold is without a doubt the most colourful metal. All the other metals on the periodic table have a silvery or brown colour, and while silver is still attractive, gold stands out above the rest.

Interested in gold investment? Download the FREE Insiders Guide to gold investing here

Gold in the movies

The second front that causes us to be attracted heavily to gold is down to the associations that we have placed upon it. As can be seen in our infographic below, gold is featured heavily in the films that we watch and the awards that are presented to the actors featured in these films.

Dream In Gold

These awards, alongside ‘gold’ being attributed to coming in first place, and the way that many of these films are heavily centered around gold, have given gold a reputation of being associated with power, wealth and success.

And, being humans, we are naturally attracted towards feelings of power, wealth and success. It makes us feel valued and worth something, and humans generally like to do this through items; gold is the perfect item for doing this.

What other benefits does gold have?

But what other benefits does gold have that makes it more attractive to us over other metals? Chemically, gold is one of the most reliable metals in the world. It can’t age, rust or tarnish, meaning the quality and value of your gold is assured for centuries to come. It is also malleable, durable and rare.

Thanks to the associations we’ve placed on gold and the science behind this attraction, gold has a timeless appeal as well. This coincides with the fact that the value of gold has been steadily rising for hundreds of years. It also doesn’t look like this rise in value is going to stop either!

Gold is great as an investment strategy. And for building huge palaces!

Finally, there are the financial benefits that make gold so attractive, especially as an investment opportunity. Gold has no counterparty risk, meaning that it is not someone else’s liability. It is also easy to convert into cash, easily portable, and has a high-value density, meaning a small piece of gold is still worth a hell of a lot of money! And, gold can’t be printed, inflated or counterfeited, so its quality is assured.

Want to know more about how gold can benefit you?

Have you got an insatiable attraction to gold that you just need to satisfy? Or perhaps you want to know more about how gold can benefit you as a long term investment strategy, with options such as tax-free gold coins? To find out more, you can contact us today on 020 7060 9992.

Image credits: and sirinat Inopas


Why we all Dream in Gold

Like this infographic? You can use it on your own website!

Copy the text below to embed this image on your site.