Amazingly, despite two separate Budgets, and a general election there were no major changes to pension tax relief. We still have an exempt-exempt-taxed (EET) regime, an annual allowance (AA) of £40,000 and tax-free cash at retirement.
This current system is not perfect but it does provide an immediate reward for savings and disincentive against spending too quickly.
Unfortunately, we also still have the complication of the money purchase annual allowance (MPAA) and AA taper relief.
Even the lifetime allowance has become more involved and is unfairly restrictive on those with money purchase or defined contribution (DC) savings. But, and this is a big but, the lack of action this year provides a glimmer of hope that any redrawing of the tax relief system will not be foisted on us without thought and preparation. If it is going to be done it must be done properly and not piecemeal in order to provide short-term political gains.
There were however issues among the things that did not happen which would have been welcomed by many in the industry. Due to the general election, the ban on pensions cold-calling announced in the Spring Budget was dropped and is now awaiting either a Lords-driven amendment to the Financial Guidance and Claims Bill or specific primary legislation. Either way, it looks like it will not come into force before 2020 at the earliest.
The general election also led to the withdrawal of the pensions advice allowance and increase in employer-arranged pensions advice exemption (trips off the tongue doesn’t it?). The pensions dashboard found itself in still waters as the government went into pre-election purdah and there was a distinct lull before the new pensions minister was able to catch up and confirm support.
Elsewhere the FCA has been focussing on the knock-on effects of pension freedoms, and the related rise in defined benefit transfers, both of which could have been easily foreseen had anyone taken the time to look at it earlier. Financial advice firms operating in these areas have rightly come under increased scrutiny and it is to be hoped that the result will be more help and guidance for both clients and advisers who are trying to do the right thing.
There is at least one more key report to come in 2017, with the results of the government’s review into automatic enrolment expected “before Christmas”. This could result in the most significant developments in the next few years if the review succeeds in finding a way of widening the scope to include the self-employed and those with several sub-threshold jobs.
The most positive development of the year for me was the rise of the Adviser Conscience, as personified by Darren Cook of Red Circle Financial Planning, Al Rush and hundreds of advisers who signed up to support them. Darren’s campaign against cold-calling started in 2016 and, as mentioned above, led this year to a government statement of intent to implement a ban. Recently Al Rush, not content with organising the Great British Transfer Debate, set up Operation CHIVE to help British Steel workers with their transfer options.
In both cases the problems were well-known or suspected by many; the difference is that these guys actually did something about it. And they galvanised the industry to support them, showing that there are those in our profession who will put consumer needs before profits when it is really necessary. At the time of writing Operation CHIVE is just about to deliver two days of free financial guidance to steelworkers in three different parts of the UK. I sincerely wish them luck with this.
I would like to finish my look back by copying Sports Personality of the Year in thinking about those we have lost. At the head of the list for me is the marvellous Mike Morrison, whom I was lucky enough to know personally. If ever anyone personified the best of the pensions industry – generous, knowledgeable and always looking to help - he did.
Fiona Tait is technical director of Intelligent Pensions
