I have been reminded by my colleague Peter Matthews that today is an important anniversary in the world of pensions. For ten years ago this very day we entered the brave new world of pensions “simplification”.
Many of our followers will of course be unaware of this landmark change, or indeed what it was trying to achieve. So I thought a quote from Wikipedia may help the understanding of all:
“Pension tax simplification, often simply referred to as “pension simplification” and taking effect from A-day on 6 April 2006 was a policy announced in 2004 by the Labour government to rationalise the British tax system as applied to pension schemes. The aim was to reduce the complicated patchwork of legislation built-up by successive administrations which were seen as acting as a barrier to the public when considering retirement planning. The government wanted to encourage retirement provision by simplifying the previous eight tax regimes into one single regime for all individual and occupational pensions.”
So a highly laudable aim - but very few savers, employers, or even pension professionals would claim to have seen many benefits from this change.
The problem of course was not the policy itself; it was more that successive governments subsequently made seismic changes to underlying principles of pension savings in the UK. Since A-Day we have items such as the Retail Distribution Review (RDR), Pension Freedoms, changes to Annual and Lifetime Allowances, price caps in pension schemes, the loss of commission in workplace savings and (of course) the ever-evolving beast that is Auto-Enrolment.
And the changes are not over yet. The Chancellor’s recent announcement on the Lifetime ISA (and to a lesser extent the Help to Save scheme also) will only serve to further complicate the worlds of pensions and workplace savings. Plus future changes to the tax relief system are still expected once the EU referendum decision has been made.
So ten years on and pensions are anything but simple. We would encourage all employers to remain aware of changes in this space via this blog, our seminars and events, or via your usual Jelf consultant.
Best regards
Steve
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