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Savings and investments

In his inaugural Autumn Statement as Chancellor, Philip Hammond decided to avoid making any significant changes to his predecessor George Osborne’s legacy of revolutionising the savings and retirement planning landscape.

A summary of the main announcements are as follows:

· Plans to further reduce the money purchase annual allowance down to £4,000. This is the maximum sum that can be put into a pension once the individual has started to flexibly access their pension savings from the age 55. The money purchase annual allowance was moved down to £10,000 in April 2015.
· He reconfirmed the Government’s commitment to keeping the triple lock State Pension in place until at least 2020. The triple lock ensures the State Pension rises by the higher of average earnings, consumer price index or 2.5%.
· He used the Autumn Statement to announce a ban on pension cold calls and a consultation to tackle pension scams. This is to protect individuals from scammers who make calls to individuals out of the blue, looking to get them to access their pensions or invest in “unique investment opportunities”. Following the pension freedoms launched in 2015, Government statistics show a marked increase in the scale of this problem.
Individual Savings Accounts (ISA)
There were no amendments to the pending Lifetime ISA, which becomes available from April 2017. The previously announced details remain as follows:
· The new Lifetime ISA can be opened by individuals between the ages of 18 and 40, and allows them to save up to £4,000 each year and receive a Government bonus of 25% on top, which works out as a maximum of up to £1,000 a year. This amount is within the £20,000 overall annual ISA allowance mentioned below*.
· The 25% Government bonus will be paid at the end of each tax year on savings put in before the individuals 50th birthday.
· The Lifetime ISA can be used after an initial minimum holding period of 12 months, towards a deposit on a first home up to £450,000 anywhere across the country. The full amount including interest, growth and bonus can be used for this purpose.
· Although the 25% Government contribution ceases to be added to any additional savings after the age of 50, the full amount can be accessed after the individuals 60th birthday completely tax free with any previous bonus, interest or growth being kept.
· Should an individual wish to withdraw their money at any time before they turn 60, they can do, however they will lose any government bonus and any interest or growth added to date. There will also be a 5% charge applied in doing so.