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The Secret IFA: Preventing problems

Hands up anyone who knows what a Charlie Foxtrot is. If not, quickly Google it. Alternatively just imagine the world of pensions and the multiple ‘protection’ regimes since 2009. In a world that was supposedly ‘simplified’ in 2006, the rules around pension annual and lifetime allowances really is a massive Charlie Foxtrot.

With pension simplification I truly believed (naively it turns out) we’d turned a corner, and pensions would develop into a brand ,rather like Isas. The Isa brand is both solid and trusted, despite Gordon Brown’s removal of the dividend tax credit reclaim.

My naivety didn’t take account of how readily governments and the Treasury would ransack pensions while pointing fingers at the fat cats and the wealthy, saying they were to blame. Three years is all it took for allowance backtracking to commence. I shouldn’t knock it as it’s been a source of new work and new clients, but actually I’m livid because I never wanted to be a firefighter.

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“A firefighter?’” I hear you ask. When I was a young boy, my pals would talk of being a firefighter when they grew up, putting out fires, rescuing people, and driving fast with a blue light flashing. But as exciting as that is, it doesn’t change the fact that fires damage things. It means people’s futures will suffer, and putting it right generally costs money.

I know it’s less glamorous, but I’d rather work in prevention rather than cure. I don’t want to be putting out fires all my working life – yet financial planning today feels more like firefighting than about prevention.

And that’s the fault of people in charge of policy, and all those other people who have their hands on the tiller (or more accurately, their snouts in the trough). I don’t believe normal people would go about things this way. If a normal person became pensions minister, or was put in charge of pension policy somewhere, surely they would feel embarrassed by these changes. But the likes of Steve Webb et al make believe they’re modern day Robin Hoods, robbing the rich and giving to the poor. In reality it’s simply an envy tax – and an easy one to collect to boot.

If the government really wanted to tackle the big injustices within pensions, they could start closer to home. Index-linked final salary pensions for MPs, civil servants, government employees, judges, and anyone else on the public purse gravy train will cripple the country more surely than anyone who builds a pension pot of £1.5 or £1.8 million. Yet going head to head with the public sector is a darned sight harder than hitting the private sector – so they don’t do it.

But this isn’t about the public versus private sector; it’s about the man in the street constantly taking short-term corrective actions rather than long-term forward planning. Constant meddling in things designed to provide long-term stability and security undermine our ability to do anything other than fight fires. To that I say Foxtrot Oscar