Advisers believe reform agenda to be dominated by cuts to tax relief and tweaks to pension flexibilities during the next parliament
Advisers believe initiatives on auto-transfer of small pension pots and Collective Defined Contribution are less likely to be a priority28 April 2015 Back to results
With the election looming, advisers believe that cuts to pension tax relief and tweaks to the recent pension flexibilities are likely to dominate the pension reform agenda in the next parliament, according to research from Aegon.
At the other end of the scale, advisers thought implementation of Collective Defined Contribution and automatic transfer of small pension pots were less likely to be at the centre of the reform agenda. Both initiatives are currently scheduled to come in from 2016, but regulations haven’t yet been published.
|Which of the following pension issues is most likely to feature during the reform following the election?||Rank|
|Cuts to tax relief on pension contributions||1|
|Tweaks to the pension flexibilities||2|
|State pension reform||3|
|Further cuts to the annual allowance||4|
|Further cuts to the lifetime allowance||5|
|Automatic transfer of small pension pots||6|
|Implementation of Collective Defined Contribution schemes||7|
Duncan Jarrett, Managing Director for Retail at Aegon said: “There’s a huge amount of uncertainty about which party will be able to form a government following the general election. However, our research indicates advisers rank the possibility of cuts to pension tax relief as among the most likely reforms in the next parliament.
“In years to come, we’ll all remember the current parliament given the scale and significance of pension reforms. No doubt advisers will be hoping for a quieter period of pension reform in the next few years which allows the new pension flexibilities to bed down. That said, we’re in the first days of a new system and it’s possible further reform may be required to address issues arising from the changes. For example, new forms of fraud may emerge and government may legislate to address this to give greater customer protection.
“The flexibilities represent both a huge change for the pensions industry and a massive opportunity for advisers given that clients have so much choice and potential complexity to navigate. Making sense of all the options will be difficult, even for the most sophisticated clients.
“By contrast, advisers believed automatic transfer of small pension pots is less likely to be a priority. This may well be because the concept of a pension dashboard, which allows people to see all their retirement savings in one place has been floated by the FCA, and this could potentially supersede the small pots changes. Similarly, Collective DC is unlikely to be a focus in the view of advisers. It’s possible advisers believe the reform, which will allow employers to pool members’ contributions, is at odds with the new pension flexibilities or that they see this as a reform aimed only at very large employers.”