Huge savings policy agenda facing Chancellor Philip Hammond and DWP Secretary David Gauke
Savers and advisers need urgent clarity on whether Money Purchase Annual Allowance cut will be implemented retrospectively
Proposed clampdown on pension scams must be implemented ASAP
Independent pension tax commission could provide certainty in an increasingly uncertain world
Tom Selby, senior analyst at AJ Bell, comments: “While clearly Brexit is the dominant issue as the minority Conservative Government formulates its focus ahead of the Queen’s Speech, there is some serious unfinished business on pensions policy.
“More than two months after a cut in the Money Purchase Annual Allowance from £10,000 to £4,000 was supposed to have been introduced, we still don’t have the accompanying legislation. It would seem grossly unfair for HMRC to hit people who have accessed their pension flexibly from age 55 and subsequently paid in less than £10,000 with a tax penalty given the lack of clarity surrounding the policy. A sensible, pragmatic short-term solution would be to push back the cut until April next year at the earliest.
“A long overdue clampdown on pension scammers must also not be knocked off course by political uncertainty. Given there is widespread agreement between the main parties that consumers need this protection, which includes a ban on cold-calling, there is no reason why the new administration can’t proceed full steam ahead in implementing the recommendations.
“Prime Minister Theresa May has placed huge emphasis on providing voters with certainty in the wake of the shock election result. She has the opportunity to put her money where her mouth is by putting a stop to pension tax relief tinkering and setting up an independent pension tax commission to place the needs of savers, rather than politicians, at the heart of any future reforms. The commission should develop proposals aimed at simplifying the system and recommend what, if any, reforms are needed to encourage more people to save for retirement.
“This could help reset the tone of pension policymaking and put a stop to the constant goalpost shifting that puts people off engaging in retirement saving.”