While the virus continues to have an effect on the financial world with advisers choosing to make permanent changes as Covid-19 battles on, the self-invested personal pension industry had a knock of its own as HM Revenue & Customs triumphed in a landmark tax relief ruling.
It’s time for the week in news.
1 Sipp defeat
Sipp providers faced defeat at the Upper Tribunal this week when the judge ruled pension tax relief is not claimable on in-specie contributions, turning his back on a previous decision in which provider Sippchoice came out victorious.
Although the court ruled HMRC’s guidance was misleading it said Sippchoice should have followed the law.
This paves the way for the tax authority to recoup 'millions' in tax, experts warned, something which the Sipp industry now has to navigate.
2 Advisers ready for permanent change
The industry could emerge permanently changed from the coronavirus crisis, as advisers, platforms and providers are adapting to post-pandemic working life.
Advisers say they have largely embraced what many see as a permanent shift away from face-to-face meetings towards virtual client communication, having also found other benefits to their new ways of working.
Providers and platforms have also been forced to accelerate changes to processes and practices, such as a move away from wet signatures. In particular, Canada Life revealed it was looking at writable PDFs for the most common forms used by advisers post-lockdown.
3 Chancellor confirms furlough extension
The government stepped up its plans to support the economy amid the coronavirus crisis this week when Rishi Sunak confirmed his furlough scheme would be extended until October.
The four-month extension is intended to support people returning to work in a “measured way” post-lockdown, with the chancellor confirming a shake-up to the way in which the scheme is funded from July.
While the government currently covers up to 80 per cent of an employee's regular wages, from July employers will be asked to begin sharing this financial responsibility.
Employers will also be able to bring furloughed employees back part-time, Mr Sunak said.
4 Pensions as debt repayment
The government has been advised to scrap the pensions triple lock in the near future as a way of recouping the hundreds of billions of pounds it has spent on Covid-19 support.
According to a Treasury document, the chancellor may have to backtrack on Conservative party promises and stop any guaranteed rises to the state pension as well as raise taxes.
Other suggestions included public sector pay freezes, an NHS and social care tax surcharge and a new carbon/green tax.
5 Market demise
Research from Aegon revealed this week the proportion of advisers offering advice on defined benefit pension transfers shrank from more than half in 2018 to four in 10 last year.
Of the 41 per cent who did offer DB advice, 3 per cent expected to stop providing it in the next 12 months, 15 per cent expected the volume of cases to “significantly reduce” while 23 per cent thought their DB work would remain the same.
Professional indemnity insurance was blamed for causing advisers to shun the market.
"Increased activity by claims management companies, an increase in the ombudsman compensation limit and a further hardening of PI insurer attitudes have made this a much riskier business for advisers”, the report stated.
amy.austin@ft.com, rachel.mortimer@ft.com
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