Over the last 12 years (since A-day) there has only been one tax year – 2013/14 – where there haven’t been changes to the tax rules on pensions. Every other year, the amount individuals can put in and/or take out of pensions to get tax relief advantages have changed. For the first half of this...
The times of calling for a quiet year for pensions are past. It’s now accepted each year is a busy year for pension legislation and pension policy. 2017 is shaping up to be no different. Although seemingly light on change at first glance, some major themes are forming, which will keep us all occupied over...
George Osborne might have left Number 11 Downing Street, but his legacy, for the moment, lives on. In less than six months, his dream child the Lifetime Isa (Lisa) will launch, and the under-40s will have a brand new way to save for the long term. Technical details about Lisa have been slow to emerge,...
The UK is a different place than it was a couple of months ago. The shock waves from the referendum vote to leave the EU have been felt far and wide, and the fun is just beginning. Over the next few years we have to negotiate our way out of the EU – an exercise...
Sometimes I think pensions are the Pringles of the financial world. Now the lid has been popped open (by pensions simplification and all that) the politicians just can’t let them alone. As you know, once you pop, you just can’t stop.
The next 12 months is shaping up to be yet another busy year for pension legislation and regulation. Here are my top five changes to look out for:
Since last July, the pensions industry had been on tenterhooks to find out the Chancellor’s decision about pensions tax relief.
Retaining the status quo seemed unlikely, so the majority of the industry backed the idea of a single rate of tax relief. However, it was widely believed George Osborne’s favoured solution was a pensions ISA – where contributions would be taxed (maybe with a bonus) and the proceeds tax-free. This would, in a single blow, save an enormous amount of money for the Treasury (some suggested £25 billion) – especially if it could figure out a way to apply it to the world of defined benefits.
Even by the standards of the last few roller-coaster years, it’s fair to say 2016 is going to be jam-packed full of pension changes. And whilst we can guess the outcome of some of these, others might be more difficult to call. One thing’s for sure – it’s going to be a busy year for both you and your clients.
Here’s my top six pension predictions for 2016:
Pension freedoms are exciting. People now have the potential for using their pension pot to draw down money as and when they need it. But with the new freedoms come new responsibilities.
Over six months in, and the evidence is that far more people than before are plumping for drawdown to provide a retirement income. But only two years ago, many would have been cautioned against drawdown, as the risky option. In our brand new pension freedom world, the risks haven’t really changed. Anyone wanting drawdown to provide them with an income in retirement has to deal with the challenges of drawing too little money, and therefore not using the pot to its fullest potential; or drawing too much and running out of pension pot way before death. Given the average life expectancy is increasing, this can be a big ask.
In the run-up to the Summer Budget, the good people at Sense Network asked me for my thoughts on pension policy. So, obediently, I came up with six predictions on what George Osborne could have in store for pensions on 8 July and beyond.
Sense Network has now come back and asked: so Rachel, how many did you get right?
Now, this is alarming. As a pension pundit you get used to sprouting your opinion on where the whole pension mess is going. But you are less likely to be pulled up a couple of months later and asked to revisit what you said. It’s like getting your homework marked in public. But here goes. This is how I did.
It’s the dawn of a new era in pensions. The new government in May ushered in a change of guard, and new ministers. But what can we expect in the next 12 months?
The good news for the new pensions minister is that the learning curve is all about Westminster, and less about the subject matter. Ros Altmann already has a sound knowledge about pensions. But she is just one cog in the pension policy wheel and cannot control its destination on her own. So much depends upon the Treasury. A good example of this, is my first likely pension change.