Old Mutual calls for independent pensions legislator

Old Mutual calls for independent pensions legislator

Old Mutual Wealth has called on the government to set up an independent pensions legislator, either in the form of a non-political body like the Bank of England, or as an independent commission.

The provider’s call for “a stand alone body” was part of a wider demand for more stability in the pensions system, amid what it stated is widespread opposition among advisers to proposed changes to pensions tax relief.

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“Old Mutual Wealth is urging the government to take a measured approach to long-term savings policy, and consider introducing a standalone body to legislate in this area to help avoid short-term policy decisions,” the statement from Old Mutual Wealth read.

The firm’s pension policy expert Jon Greer said such a stand alone body must keep politicians at “arm’s length” from pensions policy.

Mr Greer said: “I am very concerned there is a real risk that Treasury may be tempted to make short-term policy decisions designed to curb the cost of funding pensions, and that the Department for Work & Pensions will not be in a position to provide the necessary checks and balances to ensure that savings policies remain sustainable and secure in the long-term.”

Before the dramatic government reshuffle following the Brexit vote, one of the next major pensions reforms was a change in the way pension contributions are taxed.

Currently income tax paid on pension contributions is fully refunded at the marginal rate, up to the annual tax-free threshold of between £10,000 and £40,000.

However, former chancellor George Osborne last year proposed introducing a flat rate of tax relief.

An Old Mutual Wealth survey found most advisers believed such a policy would put higher-rate taxpayers off contributing to a pension, though the damage would be minimised by keeping the rate at no less than 33 per cent.

The Treasury did not immediately respond to a request for comment on the issue.

Old Mutual’s survey also found more than half of advisers believed there would be limited or no interest in one of Mr Osborne’s other major pensions policy changes, the Lifetime Isa - a policy which former pensions minister Ros Altmann called to be scrapped following her resignation.

OMW was not alone in calling for pensions policy to be taken out of the hands of politicians.

In 2015 the National Association of Pension Funds published a paper setting out arguments for the creation of an “Independent Retirement Savings Commission”.

Graham Peacock, managing director of auto-enrolment master trust Salvus, told FTAdviser he liked the idea of a Bank of England-style body for pensions.