Chris Cummings, Director General of AIFA, said: “The increase to the overall ISA limit is a positive step to encourage people to save for their future. But the decision to reduce pension tax relief for higher earners sends the wrong message and will further damage the pensions saving culture in the UK. We need people to take more responsibility for their retirement plans and Government action should encourage more people to save, not punish those who are taking the right course of action.
“The decision to immediately limit additional pension contributions from higher earners risks jeopardising the sensible savings plans of wealth creators. This will impact on the self employed, entrepreneurs, and company directors who typically make irregular annual lump sum pension contributions. Although this is restricted to a small group of people it is a worrying and complicated step from the Government. And at such a short time after A-Day it can be seen as a short-term response instead of long term thinking.
“A further worrying aspect of the Budget is the huge level of public borrowing, which is set to reach £175billion this year alone. This is a substantial increase and will place a major burden on the economy. Recognising that small businesses are the power-house of growth, we welcome the steps to help small business who have been struggling in the current economic climate. For example, extending the scheme allowing temporary loss-making small businesses to reclaim taxes on profits from previous years is a positive step.
“It is a shame that while the Government is committed to helping small firms the regulator, the Financial Services Authority, proposes significantly increasing its fees for IFA firms.
“We note the Government's plans to address the future of financial markets and that it will publish a paper before the summer that will cover regulatory approaches. Given the systemic importance of IFAs, and the fact that more consumers than ever before are seeking financial advice, we look forward to working with the Government on these plans.”