Half way through a very long, difficult and exhausting labour while giving birth to my first baby I thought, "I wish I could just press the pause button, so that all this would stop for a couple of hours so I could have a bit of a rest, a nice bath and something to eat and then get on with the hard work later on."
Of course "time out" doesn't happen with childbirth, and the exhausted mother must soldier on until the work is done. It shouldn't happen with pension reform either.
Not fit for purpose
There have been lots of calls to slow the pace of change and allow the multifarious reforms of the past several months to bed down. We are currently dealing with a rising state pension age and a new flat-rate pension to go with it; pension freedoms that are revolutionising how people spend their retirement money; and various changes to taxation - with possibly more to come in the wake of the Government's current consultation, which could potentially see tax relief on contributions removed altogether.
"No more," cry the gainsayers. "Let us digest this lot first." I am of the opposite opinion. Pensions are not fit for purpose, and have not been for some time. Improvements have been made, but the current regime is still a mish-mash, a vestige of schemes devised last century by paternalistic employers who carried on paying their employees a regular "wage" after they stopped work until such time as they died - usually soon after - or self-provision that mimics this approach.
Reform needed
Just about every feature of pensions - ranging from the apartheid between DB and DC schemes to the gulf between the lucky people who are able to leverage higher rate tax relief on contributions against basic rate tax on withdrawals and those pensioners so poor that they need to receive benefits top-ups - is unfair and chaotic. There are so many rules and anomalies that it is no wonder the average saver can't understand how to make adequate provision for their future.
Pensions need root and branch reform. The latest pension freedoms, auto-enrolment and the new state pension are just the start. There will be losers with any new regime, of course, as there already have been. They, among others, include women who have seen their state pension age rocket within a few years, and wealthier savers hit by the reduction in the lifetime allowance. There will no doubt be more. But there is no gain without pain.
There is also no doubt that some of the more startling changes to the rules - such as allowing pensioners access to cash lump sums, leaving them open to scams - are a canny trick by the Chancellor to get his hands on tax receipts sooner rather than later. But that still doesn't negate the need for further and faster reforms. Now is certainly no time to slow down and stop.
Like a woman in childbirth, the Government needs to keep going with pushing out new pensions policy, and to get it done as soon and as completely as possible in order to deliver a healthy specimen fit to face the world.
Please note: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of Sense Network Limited. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author.
