Cameron said the state pension ‘triple lock‘ could not be ignored either.

He said:

“While the government has currently committed to keeping it, the formula might be adapted. Instead of annual increases being the highest of earnings growth, inflation, or 2.5%, a smoothing mechanism could be introduced.

Pensioners might receive an inflation increase as a minimum, and if, over the previous three years, wage growth has on average been higher than inflation, they could receive an additional uplift. This would protect pensioner purchasing power and make future costs less unpredictable.”

Yet, while Cameron believed the Spring Statement was more likely than not to “pass on pensions”, the government had “many radical plans for pensions” which he said we would hear more of in the coming months.

He explained:

“The Pensions Investment Review is likely to lead to workplace pensions placing more of their members’ funds in investments designed to boost UK economic growth, which could also deliver better returns for pension savers.

And this summer’s Pension Schemes Bill will include new measures to ensure all pensions are offering good value for money as well as plans to bring together small pension pots individuals may have left behind when changing employers.”

Nothing then on providing pensions through default decumulation schemes for personal pensions, DC master trusts and occupational DC schemes

Pension tax lock

Selby noted:

“Whether or not the government does extend the period of frozen allowances, the combination of static tax thresholds and the state pension triple-lock pledge means that the full ‘new’ state pension will be subject to income tax in the next few years.

“The Treasury may be comfortable giving with one hand through state pension increases while taking with the other via income tax, but it also leaves the door open for the Conservatives to accuse the government of hitting pensioners with a ‘retirement tax’.”

Selby added there may not be “detailed feedback” on proposals to bring pensions into inheritance tax, but that Reeves could use the speech to

“give an indication of whether she is wiling to consider doing things differently or if the Treasury is committed to its plans”.

He said there could also be an update to the second stage of the government’s pensions review – but noted the policy of scaling up auto-enrolment contributions could “find its way into the political long grass”.

Energy and momentum

Hymans Robertson head of defined contribution (DC) markets Paul Waters said it would be welcome to hear about any updates on the “DC adequacy challenge” – one he said “increases with every month that passes” – adding a “clear timetable with detailed terms of reference for the second stage of the pensions review” would add “energy and momentum” back to this.

He said a clear commitment to deliver on the existing pensions proposals is also needed – both by the industry and members alike.

Waters said:

“The industry is already dealing with a significant amount of change so, arguably, the most amount of value could be achieved by completing the wide range of policy developments already in progress.”

Head of corporate DB endgame strategy Sachin Patel added the government should use the Spring Statement to announce plans to overhaul rules on the use of defined benefit (DB) surpluses.

He said:

“The government has a once-in-a-generation opportunity to unlock hundreds of billions of capital from UK DB pension schemes.

“Reforms around surplus sharing, tax incentives, and regulatory clarity could fuel material UK growth while delivering better retirement outcomes for DB and DC members.”

LCP pensions research principal Shayala McRae hoped any measures announced tomorrow would be comprehensive enough to calm speculation about tax rises or cuts pension tax relief in the Autumn Budget.

She added:

“We would like to see further detail from the government on the processes around the inheritance tax changes, ideally recognising and rectifying the more onerous elements of the proposals to alleviate the burden on recently bereaved families.

Similarly, detail around the exact tax treatment of defined benefit (DB) surpluses would also be welcome.”