EACH March the Chancellor makes his annual Budget speech in the House of Commons. This year is the last full Budget before the General Election next May and we, as MPs, had high hopes of what would be included. We were not disappointed, the Chancellor really delivered.
There was a raft of announcements to encourage businesses to set up and expand, ensuring continued growth in the number of jobs available, which is great news.
However, the best news was reserved for individuals. My Government wants you to keep your money in your pocket to spend how you think fit. The raising of the individual personal allowance to £10,000 this year and to £10,500 in 2015/16 will mean that every working person will have an additional £112 this year and a further £100 from April 2015 to do just that.
There were price cuts or freezes on beer, cider and spirits. Air passenger duty on some long-haul flights has been cut and fuel duty has been frozen. There were initiatives to encourage savings and the rules around ISAs were relaxed so that the full allowance can now be used in a cash ISA.
The most revolutionary part of the Budget was the Chancellor's announcements regarding pensions. George Osborne proposed the most radical changes since personal pensions were introduced in 1921.
Up until 1997, our company pension schemes were the envy of the world until, in his first budget, Gordon Brown signed the death warrant for almost all of them. By removing the tax credits on share dividends it is estimated he took at least £100 billion out of our future retirement pots. This forced companies to close schemes, which gave their employees a secure pension, instead offering them personal pensions where the payout at retirement was uncertain.
Pensions were seen as poor value and many people became reluctant to save into them.
As you know, we had previously made improvements to the state pension by increasing the weekly amount and introducing the triple lock. The state pension will increase by at least 2.5% or keep in line with inflation and everyone will receive a flat rate of around £150 from next April.
George Osborne ripped up the pension rule book, making your money completely accessible to you from the age of 55. From next April you will still be able to take 25% of the fund you have built up tax-free, but you will have freedom to choose what to do with the remainder. If you prefer, you can still use it to buy a regular monthly income, or you can keep it as a savings account simply paying tax at your normal rate on any money drawn out.
There were other changes to pensions, all designed to put control over your money in your own hands.
These measures address the concerns constituents have raised with me about pensions and savings, particularly regarding annuities, and will result in a much-needed shake-up in the insurance industry.
We are keeping your money in your pocket!
