Jeff Prestridge  

Regulation is stopping people from getting advice

Jeff Prestridge

Jeff Prestridge

These people will no longer have a work pension to pay into. They will fall into a pensions void.

Should we bemoan this latest pension trend identified by Hargreaves? No and yes.

No, because it is an understandable response to a desperate state of economic affairs. If it is a choice of adhering to the hire purchase agreement on the family car or carrying on paying into the work pension, most people will fight to keep their four wheels.

Yes, because it is vital that everyone should be encouraged to keep saving for a life beyond work, however far that ‘life’ may be on the horizon. It is one of the reasons why auto-enrolment was introduced – to draw more people into pensions and to get them saving from an early age. After all, ‘mighty oaks from little acorns grow’.

With workers now stopping their pension contributions, there is a danger they will not re-engage with their work pension until they are automatically reinstated in the scheme after three years.

As Royal London says, such people “risk damaging their long-term financial stability”.

The need for people to fund their own retirement – as opposed to falling back on the state for help – is also why tax relief on pension contributions still remains despite its extraordinary cost to the exchequer.

I trust this point will not be lost on the chancellor of the exchequer who could see a curtailing of tax relief on pension contributions as one way to rebalance his books that have been thrown out of kilter by Covid-19.

We are living in pretty desperate times. Damn you, RDR. Damn you.

Jeff Prestridge is personal finance editor of The Mail on Sunday