When it comes to pensions freedoms one year on, we have seen a sea-change in the way people can access their pension pots.
However, we are yet to see a sea-change in people’s behaviour and habits. Perhaps thankfully, nobody seems to have been cashing in their pension pots willy-nilly and blowing all the money at once.
At the same time, we are still seeing a huge swathe of money heading towards annuities and little real development in terms of new pension products across the board.
Will this change if the government decides to make any more changes to pension taxation? What will happen if pension Isas see the light of day?
These questions and others were posed to a panel of experts during the FTAdviser On Air debate.
Talking to Emma Ann Hughes, editor of FTAdviser, were: Steve Webb, director of policy for Royal London; Billy Burrows, director of Retirement Advantage; and Ben Gaukrodger, manager of savings policy for the Association of British Insurers.
During the debate, the panel was asked if there was any point pushing pensions if the government really does want to make sweeping changes to the existing pensions taxation regime?
Mr Webb said: “Constant tinkering with tax certainly undermines confidence in pension saving.
“For employees it still makes sense to stay in automatic enrolment and benefit from an employer contribution, which is likely to be a good deal under almost any potential tax regime.
“But the sooner we have certainty and stability, the better.”
In agreement, Mr Burrows said while the government may well still tinker with tax, he believed saving into a pension was still important.
He said: “Of course there is a point in recommending pensions – pensions still offer valuable benefits not found elsewhere.”
Mr Gaukrodger said while it was true government could change tax settings in the future, he said this held true for any tax wrapper. More importantly though, when changes do occur, it is extremely rare for them to be retrospective.
He added: “The outcome of the Treasury’s consultation on pensions tax relief was that there were no changes to the tax treatment of pensions, so a presumption of future change is not the right starting point.
“HMT have been clear that auto enrolment is a primary focus for the Government, and they don’t want to do anything that will damage it. That is an explicit endorsement of pensions by the government.”
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