In the noughties we passed through the red-tape joke that was pensions “simplification”. Many readers will be aware that this exercise ultimately produced a legislation landscape that is perhaps more complex than the one it replaced.
Roll forward a decade, and George Osborne’s Freedom of Pensions proposals could end up producing an entirely new, and equally complex, pensions mess.
Whilst the general thrust of the Freedom of Pensions proposals are very welcome, the surprise nature of the announcement always suggested that the detail may not have been sufficiently thought through. And even on the day of the announcement there was some quiet concern that this was more a case of pre-election political grandstanding than a sober and considered loosening of the old restrictions.
This may indeed be the case. Potential loopholes which will help both older workers and employers lessen their tax-take by utilising pension savings as an alternative to traditional remuneration structures are (of course) being eagerly considered by tax experts. And in turn, HM Treasury will be keen to find ways of avoiding this happening.
One proposed solution was reported last week in the excellent Corporate Adviser magazine, and it makes for somewhat depressing reading if you like your pension’s legislation simple to understand and use. The item can be viewed via the following link:
It remains to be seen what measures will ultimately be taken to reduce such potential abuse of the new proposals. In the meantime we just have to wait, and hope, that the solutions are not more vexing than the original restrictions.