Iain McCluskey, tax director at PwC, says Yes
This was a Budget for those who choose to, in George speak, fix their roof. With returns on savings sitting at miserable lows for most people, the chancellor had to innovate to try and encourage the country to save. He did this by using the Budget to further liberalise pensions and Isas.
The biggest savings boost was for first time buyers, with an eye-catching new Help to Buy Isa. Up to £3,000 is on offer for those saving to buy their first home, a fairly motivating sum. However, as property prices rise, affordability remains the big challenge for first time buyers – let’s hope that this measure doesn’t fuel house price growth further.
For those of us who often have to dip into our Isa for an all-too-frequent rainy day, it’s good news that we’ll now be able to pay this money back in. One note of caution: further cuts to the pension lifetime allowance will worry some savers, who prefer pension saving to Isa saving. But overall, this was a Budget for savers young and old.
Nigel Green, founder and chief executive of deVere Group, says No
George Osborne’s move to reduce the amount that people can save into a pension tax-free to £1m will be a significant disincentive to save for many – it reduces the reward for doing so.
With an ageing population, and the subsequent pensions and care crises, the state is no longer able to afford to financially support retirees as it has done in previous generations. It is therefore essential that there’s a monumental cultural shift in attitudes to saving for retirement, and yet the lifetime allowance cut flies firmly in the face of this notion.
It is another hammer blow for all those who have diligently put savings aside to enjoy the retirement for which they have worked all their lives. It punishes their prudence, sacrifice and hard work. The seemingly routine cuts to the lifetime allowance are, it could be argued, a stepping stone to a fully-fledged wealth tax – as that is what these limitations essentially represent.