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Post election musings, part 2

21.05.2010

First we had the 7 page coalition policy document, now we have the "full" 36 page document. Lots more detail on pensions, then? Well, not quite, the first 9 pages of the new document are glossy words and a picture of the honeymoon couple, so it's not as big as it looks, but a bit more detail is starting to emerge.

The previous commitments are stated again - raising retirement ages, compensating Equitable policyholders and changing the rules around annuities at age 75. This last point has already prompted many column inches speculating what the new rules might be, well I could let you have pages of speculation as well but I'd rather wait and tell you what the actual rules are when we know for sure.

Again there is no mention of the threatened LibDem restriction on pension contribution tax relief to the basic rate, fingers are still being crossed that we won't see that one appearing.

A couple of new points appear in the latest document. One is:

"we will explore the potential to give people greater flexibility in accessing part of their pension fund early".

This looks to be based on a LibDem idea, that people should be able to draw out part of their fund early in cases of serious financial need. A good idea, which would increase the attraction of pensions, but I can see challenges in making it work in practice. There has got to be a risk that someone will draw from their fund early, manage to lose the money and then have less at retirement when they really need it. Well worth looking at, though.

The other new point is a bit vague, saying:

 "we will simplify the rules and regulations relating to pensions to help invigorate occupational pensions, encouraging companies to offer high-quality pensions to all employees, and we will work with business and the industry to support auto-enrolment".

This all sounds positive, and simplification will be welcomed with open arms by everyone in the industry, let's hope they can deliver. Overall, after 13 years of Labour government damage to UK pensions, the noises we are hearing from the new government are very welcome. If they can create a climate where the public have a positive view of pensions again, that really would be a big achievement.

Much more detail to come I think, and I'll keep you posted...................................

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