The main two reasons given for not supporting changes to pension tax relief were that it is right that tax relief is received at the rate tax is paid (42%) and that there has been enough change and a period of stability is required (40%).
Of the 41% of advisers that do support a change to the system, the most popular reason is because the current system is not equitable between tax payers according to 27% of advisers. There is also a feeling amongst 16% of advisers that people don’t understand the current system, meaning it is not an effective incentive to save.
Only a third of the advisers questioned would like to see a flat rate incentive with 25% supporting a flat rate of 30% and 8% favouring a system of matching Government contributions on a 2 for 1 basis. Just 4% of advisers would like to see ISA style taxed, exempt, exempt pensions.
Andy Bell, chief executive of AJ Bell, comments:
“This is a heavy dose of realism from the adviser community. There is a very serious danger that product providers and industry commentators are attaching themselves to radical changes because they are assuming those changes will be made. They are jumping on the bandwagon rather than actually thinking about the right outcome.
“Our discussions with the Treasury do not suggest there is a foregone conclusion. There is a genuine desire to find the right outcome that meets the Government’s objectives of simplicity, personal responsibility and sustainability. There has been no evidence presented that proves radical changes will encourage people to save more than they do today and if further change did bring further complexity, which is highly likely, it could have the opposite effect. This is clearly what the majority of financial advisers think and they are the ones that spend more time talking to investors than any of us.”