An independent pension commission is something for which we at AJ Bell have long campaigned.
We would welcome a commission with a key objective of simplifying the pension system. We believe a system that is easier to understand will encourage more people to take responsibility for their own retirement.

Simplification and stability could make a significant difference to how people engage with pension saving. This can only be achieved if the ever present temptation for politicians to change the rules is removed. Putting these decisions in the hands of an independent body is likely to help achieve cross-party support, as well as encouraging a long-term commitment to less interference.

We have seen the consequences of what happens when politicians tinker without understanding the wider implications. The tapered annual allowance and impact on NHS waiting lists is a classic example. There is debate as to the amount of sympathy these high-earners with gold-plated pensions should receive, but the bottom line is they’re not going to work for next to nothing after tax charges have taken effect, and if it’s you or a loved one that sits in pain on an ever-growing waiting list for an op then you want it sorted.

On the other end of the scale we have the net pay anomaly for low paid workers. NOW: Pensions estimate those earning between £10,000 and £12,500 a year and in a net pay scheme lose out on up to £111 million/year. Again this is an issue that the Government have been made aware of, but any action that has been taken appears a long way from resolving the issue.

There is a lack of confidence in the current system. In the latest Wealth and Assets Survey from the Office for National Statistics (released August 2018) we still have 13% of people who don’t know enough about pensions to use them, 8% who prefer alternative forms of savings, 7% who are simply not interested, and 5% who do not trust pension companies/schemes.



If the key issues could be looked at properly and we get “Simplification - the sequel” with as little political interference as possible and a long-standing commitment not to meddle then this can only be for good.

In the Office for Tax Simplification’s recent second report following its Inheritance Tax (IHT) review it also touches on pensions. It concludes that the interaction between IHT and pensions is a complex area, but IHT is only one of a number of taxes that apply to pensions. It goes on to state “It may be appropriate, at some point in the future for the government to consider a wider review of the tax system and pensions, possibly carried out by the OTS.”

Importantly the pensions minister, Guy Opperman, is also on board, having recently been quoted suggesting such a commission could look at issues such as tax allowances, solutions for the self-employed and raising minimum auto-enrolment contributions.

Here’s hoping the noise turns into action and we can have a long-term solution and stability - in contrast to the continuous politically-motivated upheaval of the last 8 years.

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Lisa Webster is senior technical resources consultant at AJ Bell