As both of these were increases in line with the consumer prices index, only a change of heart on behalf of the chancellor would have meant they did not happen.
So, having no other tweaks or changes to pensions was unusual to say the least, as most previous chancellors have struggled to resist the temptation to tinker with these retirement savings plans in one way or another, sometimes in a veiled attempt to increase the tax take. It is one of the reasons our pension system is more complicated than it needs to be, after all, layering change after change onto an already heavily regulated product is unlikely to make things easier to understand.
In one way, the lack of tinkering this time around is a blessing for the pensions industry, since constant changes provide little help to those who are either advising on or providing pensions, and it certainly puts off those savers who are looking at the best way to put money aside for their retirement.
However, when you look at what is currently going on in the pensions marketplace, it is perhaps easier to understand why Philip Hammond may have felt the need to give pensions some breathing space.
Self-invested personal pensions (Sipps), for example, have been getting something of a hammering the past few weeks. Given the nature of the Sipp – where the person owning the product has the right and responsibility to choose from a myriad funds and products to use for their assets – it is easy to see these could be a target for mis-selling accusations. Clients are expected to make decisions about what they want to invest in from myriad options, and it is certainly a daunting task that, in all honesty, is probably best left to the professionals for many people.
So, while some Sipps will have been mis-sold, there is also a tendency for some clients to say they would have ‘never done this if I had not been told to’. Mis-selling has to be a fault at the beginning of owning a product, not something that can be alleged because, despite understanding what they were getting into, things just had not turned out the way a client hoped.
That is not a pass to let bad advisers off the hook. Some people really would not have appreciated what they were taking on, or the kind of investments being offered. These clients are the ones who have a justified complaint for the Financial Ombudsman Service (Fos).
However, the number of these complaints is thought to be increasing as a result of claims management firms cold calling clients and encouraging them to challenge their advice. Given that at the last count the Fos was only upholding half of these claims, many are unfounded. Yet anyone involved in a claim against them still has to go through the process of finding all of the relevant information, written documents, phone call recordings if they have them, and so on. All of that costs time and money, and it reinforces why advisers are being more cautious about which clients they take on.
One of the main sources of new Sipp business is transfers from defined benefit (DB) pensions, and there is always concern about moving someone from DB to defined contribution (DC) benefits. The difficulty for advisers is categorically showing that either it is better for the client in their particular circumstances to leave the DB scheme, or that the client was insistent even though the adviser was telling them they should stay where they are.
The precarious situation for the British Steel Pension Scheme workers is a case in point as to how complicated it can be for DB scheme members to get the right advice about moving to a different type of pension in a timely fashion. There is a looming deadline for the paperwork to be completed to allow scheme members to transfer out, yet advisers say itcan take as long as four weeks to fully go through all of the ramifications and paperwork with their clients. It is little wonder the British Steel workers are struggling to get the help they need.
A fear of the regulator also plays a big part in this, and there is no doubt it will come down with an iron fist on advisers who make a mistake. That is how it should be, but there is also a danger that consumers are missing out on advice because the advisers are too concerned about getting it wrong and ending up in hot water. It is a Catch-22 for the advisers.
John Moret, the ‘father of Sipps’ has suggested the number of mis-selling claims is set to escalate in the coming years, creating a sense of even greater foreboding. But for many people, Sipps are a good product and it would be a shame for them to lose traction out of fear for their use.
Alison Steed is a freelance journalist
