Pre election musings
So the election is here- it has been on the telly so it's official. Trying to decipher the hot air, sorry manifestos, and apply that to our small little world of pensions is no easy task. May be wide of the mark but my initial thoughts are that for our industry we have to ask ourselves if the outcome be it red, blue or yellow (OK Clegg did OK on the telly but this is still a push) how much will this matter? Some initial pre election musings...
The clearest indication has come from the Lib Dems who have been bold as is their way and confirmed they will abolish higher rate relief on personal contributions. This sounds relatively innocent, but it is of course wrong as it is double taxation - higher earners lose tax relief on the way in and are still taxed on the way out when they take benefits. This double taxation would make it better to take the net earnings and forget about pensions altogether and importantly; forget about pensions for their employees - who wants to spend time safeguarding their employee's future when the message they are getting is that pensions are such a lousy deal?. Abolishing tax reliefs sends out the wrong messages, the simple and effective solution to concerns about "fat cats" is to restrict the annual allowance, why can't any political party accept that the pensions industry has actually come up with a good solution on this?
One assumes Gordon will rumble on with ASP a truly super Friday afternoon idea and we hold out hope that the Tories will back up the positive noises they have made on this topic. Although I am a tad lost on their insistence that they will remove the compulsion to annuitise at age 75? - to be fair, they do talk about effective compulsion, but it's unclear what they would put in its place (something simple might be a good idea).
More relevant is perhaps not today's promises but a thought on as a pensions industry how we have got to where we are now? In truth a succession of blows have been landed over the last 13 years the first and arguably most brutal being the £5 billion a year pensions dividend tax credit theft; that we are constantly cowering worrying what is coming next. Whatever the outcome next month my hope is that going forward we can engage with the powers that be and be treated as part of the solution to our savings shortfalls rather that waiting for the next blow to come.