While this year the Chancellor's Budget speech continued the pattern of recent years in having little to say on pensions (and nothing about restoration of ACT credits), there were nevertheless several noteworthy points on the subject.

1. The earnings cap is increased, as required by ICTA 1988 s.590C, to £99,000 for 2003/04.
2. Some employers apparently have thought tax-relieved contributions to employees' personal pensions were either unrestricted, or restricted only by the age-related percentages of net relevant earnings. The Revenue has made it clear that the same rules apply equally to employee and employer contributions, namely that the earnings cap applies to net relevant earnings and then the age-related percentages apply to capped earnings.
3. FURBS: while their future status is very unclear, pending the Revenue's second consultation paper on the 'simplification' proposals, one ray of light has been shone on them by the Budget. This concerns FURBS with more than one member and group life policies. An unfortunate anomaly has arisen under ICTA 88 s.541 whereby in the event of second or subsequent deaths, previous death benefits are treated as 'relevant capital payments' when calculating chargeable gains. These accumulate with each additional claim, so that for example in a 50-member scheme each death benefit (after the first) could be assessed to tax up to 49 times. A chargeable gain problem does not arise where, instead of group arrangements, policies are arranged for individuals, subject to individual underwriting; but the additional administrative expense this involves should not be necessary. The ABI and the SPC, in particular, have successfully lobbied for this to be addressed. The Chancellor has not only removed the anomaly but made it retrospective: cases where tax has been paid in the past can be re-examined and the tax may be reclaimable.
4. The annuity market may be stimulated a little by clarification of the scope of the Chargeable Event rules: Friendly Societies are now undoubtedly on a par in this respect with Life Offices and therefore more likely to enter the market.
5. While the Chancellor's announcements about the Pension Credit (coming into force from October 2003) were not news, he did have three items of small cheer for old age state pensioners:
   1. no longer will a pensioner suffer a reduction in their state pension after six weeks in hospital, to cover meals and accommodation; "even if they stay in hospital for up to a whole year", said the Chancellor (implying the charge will still be imposed on long-stay patients); and
   2. a variation on the glacial 25p per week reward for attaining age 80: an extra £100 will be added to the annual £200 Winter Allowance "for every household where a pensioner reaches the age of 80, or is over 80" - so where a pensioner couple are both over 80, they will share the extra £100. It is assumed that this is an addition to the 25p per week, not instead.
   3. while for the under-65s the income tax allowance is to be frozen, for those aged 65-74 it will be increased above inflation from £6,100 to £6,610, and for the over-75s from £6,370 to £6,720.