The government faces an immense amount of work this parliament that could restrict pensions minister Baroness (Ros) Altmann’s aspirations to bolster the pension reforms, Iain Anderson has warned.
Speaking at a one-day conference held by financial services consultancy the Lang Cat in London last week, which looked at the retirement freedoms eight weeks on, the director of corporate communication firm Cicero said that the more pressing issues of austerity, the EU referendum and constitutional reform could limit her plans and influence.
“With 26 bills, a 12-seat majority and no majority in the House of Lords, political oxygen will be pretty limited,” he said.
Other important issues the government faced post-election were the guarantee on triple lock and the Bank of England Bill, with the upcoming Budget likely also to include restricting pension tax relief for higher earners, tax avoidance, removing IHT on £1m properties and introducing flexible Isas.
“An avalanche of consultations is coming your way, which will set in motion lots of thinking. Stand back and prepare,” he warned.
The conference coincided with the launch of the Lang Cat’s 38-page report, When the Levee Breaks: What Next for the UK Retirement Savings Market?, which looked at some of the consequences of the freedoms.
It cited the Lang Cat’s “third law of embuggerment: financial legislation or legislation will always bump up a client’s total charges, even if it was designed to cut it”, and discussed increased or introduced charges by providers for drawdown.
It also laid out three questions for Sipp providers to ask themselves regarding pension investment: “Are you comfortable with the source of these assets and the process of how they have reached your products? Are these the right customers for you or should you point them towards something more suitable?
“Can your systems and service levels handle the extra business coming in without falling over?”
Another talking point the report highlighted was the dilemma of the insistent client. The report said: “Advisers can be clear on what to do in such a scenario, and as [PFS chief] Keith Richards said, advisers should ‘walk away’ but how many times can you do that?”
David Trenner, technical director of Glasgow-based Intelligent Pensions, said: “There will be less traction for more pension reform by the government – the freedoms were always political, and were about winning the election.
“Higher costs were inevitable. The problem with Sipp providers is that you have big ones that can take a view on what business to accept and small providers that can only compete with the small cases. It took the regulator a while to say that they were suited only for serious investors.”
Top five goals for pension savers aged 55+
59% want guaranteed income
42% want access to lump sums
58% want assurance pension is safe
50% want minimum guaranteed income
40% want minimum tax
Source: YouGov for Deloitte/Lang Cat