Latest Columns
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Tilley: Rebooting the FOS makes sense
I’ve written before about the lack of coherence in the UK’s pension complaints landscape and it remains a source of real frustration for those of us working in the sector.
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Tilley: Are we asking too much of pension savers?
Working in UK pensions, I’ve always accepted that the system evolves. Fiscal pressures change, demographics shift, and governments recalibrate policy objectives. But even allowing for that, the pace and volume of legislative change in the pensions space over the last few years feels unprecedented, and in my view increasingly problematic.
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Lisa Webster: Beware IHT and pensions double taxation
One of the most disliked aspects of bringing pensions into the estate for inheritance tax (IHT) purposes from 6 April 2027 is the double taxation that will occur when the member dies on or after their 75th birthday.
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Lisa Webster: Should tax-free cash always be taken?
Since the Lifetime Allowance was abolished and replaced with the Lump Sum Allowance (LSA) and lump sum and death benefit allowance (LSDBA), we have seen an increase in SIPP members who want to take drawdown only – foregoing the right to take the associated pension commencement lump sum (PCLS).
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Lisa Webster: Good news from DWP for SIPPs but not SSAS
The DWP has just released its long-awaited consultation on the SIPP transfer regulations – and it’s largely encouraging news. As an employee of a reputable SIPP provider the changes are positive. SSAS providers may be less enthusiastic about some of the proposals.
Popular News
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AI could bridge advice gap say pension professionals
A third (34%) of pension professionals believe artificial intelligence will boost member advice and guidance and help to close the advice gap, according to a new report.
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4 in 10 over-55s have no plans for pension lump sum
Nearly 40% of over 55s (38%) have no plan in place for the tax-free cash they can get from their pension.
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Lisa Webster: Good news from DWP for SIPPs but not SSAS
The DWP has just released its long-awaited consultation on the SIPP transfer regulations – and it’s largely encouraging news. As an employee of a reputable SIPP provider the changes are positive. SSAS providers may be less enthusiastic about some of the proposals.
The firm has set out a series of proposals designed it says would “radically simplify” the rules savers are required to navigate.
AJ Bell’s ‘manifesto’ includes:
ISAs
· ISAs, which have become popular with investors partly because of their simplicity, are under threat from the same creeping complexity that has suffocated pensions
· We now have at least six different types of ISA, each with different rules and restrictions people need to understand
· The next Government should return the ISA to its simpler roots by creating One ISA incorporating the main features of the existing framework
· This would include a 25% bonus on the first £4,000 of savings where the money is used to pay towards a first home, payable on completion
Pensions
· The next Government, whoever it may be, needs to address mounting complexity which risks putting an entire generation off saving for their future
· In the short-term the annual allowance taper needs to be scrapped to ease strains on the NHS
· This should trigger a longer-term, independent review of pension tax rules aimed at simplifying the system and encouraging more people to save for retirement
· The unfair and poorly understood money purchase annual allowance (MPAA) should also be ditched as part of this review. If necessary, the annual allowance could be lowered to compensate for any lost revenue to the Treasury
· In addition, policymakers should aim to simplify the overall tax structure by moving to a single annual allowance for defined contribution (DC) pensions and a lifetime allowance for defined benefit (DB) pensions
· Pension death benefits should be formally excluded from the Inheritance Tax net to remove the situation where pension providers, not the customer have discretion over who receives pension funds when someone dies
Andy Bell, chief executive of AJ Bell, said: “All too often election manifestos focus on short term political point scoring, while the savings gap in the UK continues to widen.
“This is one of the biggest challenges our society faces and the next Government will have a huge opportunity to make life a lot simpler for people trying to do the right thing and save for their future.
“Pension reforms in 2006 were supposed to usher a new era of simplification for pensions, but since then politicians have repeatedly tinkered with the rules to the point even an actuary would struggle to make sense of some of them.
“No sensible person would create a pension system from scratch with three different annual allowances, a lifetime allowance and no fewer than seven lifetime allowance ‘protections’.
“Now automatic enrolment has been fully introduced, focus needs to turn to engaging more people to save for their own futures.
“Creating a more straightforward tax system which people understand is a necessary condition for building greater levels of trust in pensions.
“ISAs have similarly morphed from simple beginnings to become increasingly difficult for investors to understand.
“Incorporating the best features of the current ISA system in One ISA, including the bonus for first home purchase, while removing the unnecessary complexity we know puts people off would make life easier for millions of people.
“Furthermore, new investors could be better encouraged to save for their future in a system they can more easily understand.”