Ongoing uncertainty surrounding other policies is doing little to offer comfort to savers. In the weeks leading up to the Autumn Budget 2021, rumours of cuts to pension tax relief
dominated much of the personal finance press.
So too, did uncertainty surrounding the annual savings allowance, as well as considerations about extending the triple lock suspension.
And while no formal announcements have been made regarding potential policy changes as yet, the ‘no news is good news’ approach no longer seems to neutralise government criticism.
Indeed, My Pension Expert’s study found that the majority (53 per cent) of people over the age of 40 are concerned that the treasury will cut pension benefits – such as the annual allowance and pension tax relief – even further in the coming 12 months.
Almost a fifth (18 per cent) of savers also stated that uncertainty surrounding pension tax relief is having a negative impact on their retirement finances.
Within this context, it should come as little surprise that an overwhelming majority (87 per cent) of Britons have no confidence in the government’s handling of pension policy.
This figure is striking, and highlights that the government must act rapidly to restore confidence and reassure the public that retirement savers will not be left behind in the UK’s post-Covid recovery.
The question, therefore, is what steps must ministers take to achieve this?
A call for change
Such a lack of confidence highlights a clear call to action for the government, and the public appears to have a rather clear idea of what it wants to see.
For example, that same My Pension Expert survey found that almost two thirds of over-40s in the UK believe that simplifying the pension sector would help those saving for retirement.
This is understandable, particularly in the aftermath of the Department of Work and Pensions underpayment scandal, which saw tens of thousands of retirees – mostly women – being underpaid by thousands of pounds in their state pension.
Indeed, this scandal seems to be a consequence of layer upon layer of complex pension legislation being introduced to the sector over recent decades – it caused thousands to fall through the gaps and suffer financial consequences.
Elsewhere, 37 per cent of Britons are keen to see the government reverse its stance on increasing the pension freedom age from 55 to 57 in 2028.
Again, this highlights public contempt for creating new rules which add further complexity to the system, while destabilising financial plans as the UK attempts to regain some sense of post-Brexit normality.
Such change is certainly necessary and would require the government to conduct a thorough and transparent enquiry into the operational sustainability of pension policy, regulations, and legislation.
