Buck Bond Group

Pensions industry needs time to plan for changes

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Wikipedia has imposed a ban on page edits from the US House of Representatives following “persistent disruptive editing”, according to BBC news. The block comes after anonymous changes were made by a minority of naughty individuals to entries on politicians and businesses as well as major historical events, such as President Kennedy’s assassination. You have to watch politicians because the devil is in the detail. It also brings to mind politicians on this side of the pond.

The UK Government has published its response to the consultation on the biggest changes to the UK pensions world in generations. From next April, anyone with defined contribution (DC) pension arrangements over the age of 55 will be able to access their DC savings as they wish, regardless of their total pension wealth, but subject to their marginal income tax rate.

Members retiring from next April will need to consider their plans more carefully and in an attempt to ensure they make the right choices the government has announced they are to get free and impartial guidance at retirement. The Financial Conduct Authority is being given a formal role in setting standards for those organisations that provide the guidance. DC Trustees are to be given a statutory override to enable them to offer flexibility to members. Tax legislation is being amended to permit providers to devise new and innovative products for the post-April 2015 pensions world.

It’s all very exciting for the government with an election coming up, and all very daunting for the pensions world that still does not have sufficient details from the government to plan adequately for changes which are now only nine months away. As things stand the pensions industry faces some serious challenges.

I get the feeling that the short timescale is being driven by the fact there is an election next year and another year lead-in would have made life easier for the pensions world and better for members taking pensions guidance. Providers need time to come up with solutions fit for purpose, and these cannot be designed until the government has finally decided on the detail.

If the government takes until Christmas to finalise the detail it is unreasonable to expect the industry to be prepared by April – what are good changes allowing members more flexibility now run the risk of getting off to a chaotic start.

The devil is indeed in the detail. You just need to look at Wikipedia which records that at the recent US PGA Trophy Phil Mickelson came first closely followed by Rory McIlroy!