Pensions need to be a ‘no go’ area for a while to let the sweeping changes made over the last few years bed down, following the loss of Steve Webb as pensions minister in the general election.
Following today’s (8 May) election result, in which the Conservatives won by an unexpected majority, Mr Webb lost his seat in the Thornbury and Yale constituency to Conservative Luke Hall by 1,495 votes.
Mr Webb introduced a number of sweeping changes designed to encourage retirement saving and protect existing and future retirees. He held the job as minister of state for pensions for the past five years. Now, questions are being raised as to who will take up the pensions mantle under the Conservative government
Jamie Smith-Thompson, managing director of Portal Financial, said: “The question now is what the future holds. Pensions need to be a no-go area for a while; there have been so many reforms recently that there needs to be time for the dust to settle and for people to get used to what has already changed.
“However, we may see further adjustments, especially if the new minister feels as though there are big shoes to fill, and this could lead to more confusion for consumers.”
Adrian Walker, retirement planning manager at Old Mutual Wealth, flagged up that the next pensions minister must ensure the progressive pension reforms “continue sensibly”.
He said: “Any Conservative pensions minister should look at their manifesto proposals very carefully to ensure they do not damage the attractiveness of pensions as a savings vehicle for high earners.
“For higher rate taxpayers concerned that the election result means tax relief on future contributions may be cut back, it is worth considering making additional contributions now while tax relief matches tax paid on income. “
Mr Walker added that ‘carry-forward’ rules mean that any unused annual contribution allowance from the past three years can be used, meaning an individual could actually make up to £120,000 in contributions.”
Malcolm McLean, senior consultant at pension consultants Barnett Waddingham, said: “It will no doubt be a great disappointment to many within the pensions industry to learn that Steve Webb has lost his seat in the election and will no longer be able to continue his work now as pensions minister.
Mr McLean said that there will now be no doubt much speculation as to who the new pensions minister might be.
“There are no immediately obvious candidates and it would be unfortunate given the many pension challenges that still exist, if the new minister was someone with little or no experience of pensions, as was sadly evident prior to Steve Webb’s tenure.”
Joanne Segars, chief executive of the National Association of Pension Funds reiterated the organisation’s belief that an independent commission would be the best way to address the challenges ahead, as well as bidding farewell to Mr Webb.
“Pensions were a hot topic during the general election campaign and we expect this interest to continue in the coming Parliament. It’s less than two months since the pensions system underwent the biggest reforms in decades and the hard work of our industry did much to ensure these changes were implemented successfully.