Some of us are permanently scarred by our experiences. Mine is around the Gordon Brown tax raid on pensions. Spend the first five years of your career telling everyone that pensions are tax free, then wake up one morning to find that this was a Government spin, and that I was the sucker and had taken all my friends and clients with me. I also remember telling all my friends that Government would not be paying your pension when you reached retirement. This too turned out to be a lie (so far), since our taxes fund all sorts of state pensions. The only benefit to this advice is that those of us who opted out of Serps S2P got a strange double bonus when they were-re-instated and under the socially led client state we now all receive the same benefits in equal measure.
In more recent years the lifetime allowance tax charges have at times led many pensions to be tax negative. And legislation has continued to pile up, a delightful screen to our profession called complexity. Significant pension pots have proven to be a client for life – an inescapable trust wrapped in tax legislation that require your services. For the vast majority of members of DB schemes with benefits with a value in the range £30-100,000 the current process does not work at all well, given lengthy delays and highly variable adviser outcome choice. This too points to market failure.
Since there has been a blizzard of pension consultations from chancellor Jeremy Hunt at his Mansion House speech, and a theme is emerging from the complex web of interests that the Government want the £2.5 trillion lying inside pension funds (mostly in the trust based occupational sector) to be working for UK PLC. IFAs can expect a boost. The IFA sector has been reassured by Jeremy Hunt that one way or another, a large proportion of this money will find its way into SIPP based pension funds. Even if only a fraction is directed more at the UK equity markets, then this will feed through to more positive IFA-client reviews.