BrexitOct 21 2016

Advisers plead: no more pension tinkering

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Advisers plead: no more pension tinkering

Chancellor Philip Hammond must leave pensions alone in his Autumn Statement, advisers have said.

Following the government's sudden decision to shelve its secondary annuity market plans months before its 2017 implementation, advisers have asked the new chancellor to impose a "freeze" on further pensions tinkering while existing rules bed down.

Michael Brooke, financial planner and pensions expert at Clarion Wealth Planning, said: "Many in our sector believe that, in these uncertain times, the Treasury could create stability and much-needed confidence in the pension system by implementing a long-term freeze on any further government tinkering.

"Mr Hammond is due to deliver his inaugural Autumn Statement at lunchtime on 23 November.

"We at Clarion call upon him to heed the voices of those who spend their working lives dealing with the consequences of constant meddling and take this opportunity to announce a regulatory moratorium."

Mr Brooke commented that hopefully, Mr Hammond would be "too busy dealing with Brexit to make any more changes to pensions".

It is vital we make sure people are saving for retirement at as early a stage as is possible and not allow these products to be tarnished. Calum Bennie

However, he also expressed concern that the government's plans to scrap the secondary annuity market might signal more changes to the pensions freedoms which came into being in April 2015.

He added: "We must hope this action by the government is simply a result of recognising that the policy was unworkable, and that it does not represent the beginning of a wider process of unpicking the pension freedoms devised by former chancellor George Osborne and his team."

The comments echoed those made by Calum Bennie, savings expert at Scottish Friendly, who expressed concerns this move could be another "nail in the coffin for pensions".

According to Mr Bennie: “The news the government has cancelled plans to create a market for secondary annuities is yet another nail in an already damaged pensions coffin.

"While it may not be the final one, it really does highlight the need to take alternative options seriously."

Although he believed the creation of a secondary annuity market "ran the risk of creating further problems and a mis-selling scandal" he thought this U-turn risked "damaging the pensions brand even further".

He added: "There should be a concerted effort to make pension saving fair for all and incentivise those on lower incomes to put money away for when they do reach older age.

"With interest rates at rock bottom it is vital we make sure people are saving for retirement at as early a stage as is possible and not allow these products to be tarnished."

On Tuesday 18 October, HM Treasury issued a statement from Simon Kirby, economic secretary, who explained the government had pulled the secondary annuity market plans because the "consumer protections required could undermine the market's development".