Is the Budget the beginning of pension simplification?

Call me cynical, but seeing is believing.

your cynical

To Anonymous 1:

'your cynical' what?

or did you mean 'you're cynical'...

I hope you don't write client reports!

All good, but still hurts the guys who are leaving it late, say last 10 yrs to retirement, to get their funds up to scratch, when perhaps in earlier life they couldn't afford/didnt understand the benefits of pension planning. Especially if you compare someone like say, a partner in a law firm starting late funding all himself, vs the massive accrual of benefits enjoyed by senior managers in Civil Service, or Hospital consultants, and the benefits they enjoy. Maybe I'm cynical too, but arent most of the decision makers also on FS benefits, therefore not too concerned about the guys who need to put large sums in now to give any kind of reasonable fund, and to whom any kind of limit has no effect.

At least they seem to want to start asking the pensions industry how to go about it. Does anyone know when they are bringing in the age 77 rule?

Peter you have a fair point, let's hope the new consultation is genuine and that comments like yours get passed on. We all need to participate in this in a positive and constructive manner and then just maybe we will get some rather long overdue pensions simplification.

Steve:

The deferral is immediate so anyone taking benefits from 22/06/2010 can delay annuity decision until 77 and continue in Unsecured Pension (USP or drawdown). Formal legislation to be included in Finance Bill 2010.

Watch out though because the rules about taking Pension Commencement Lump Sum (PCLS) still apply at age 75; ie take it before 75th Birthday or lose it and such a payment becomes an "Unauthorised Payment."

Budget Note BN22 from HMRC confirms.

Why is the new government proposing further messing about with tax relief on pension contributions made by the very small number of people who earn inxs of £150,000 (only 268,000 of them according to a slide I saw yesterday at a Skandia seminar)?

If genuine simplification is to be pursued, it will be better simply to impose a contributions limit of 30% of earnings with one year's carry forward. Simple. Why should high earners be penalised? They already contribute more to the national exchequer than anyone else.

Scrap the LTA, scrap input limits, scrap income limits from accumulated funds being governed by GAD rates, scrap tax on dividend income, scrap tax on unspent funds in retirement, restore WoP, restore life insurance as an option available by way of an active PP, replace all these awfully complicated third way retirement income products with a universal Pension Income Bond. There, job done.

Somebody forward this to Steve Webb please.

Pension simplification???

Nobody gets a pension and pensions are not worth investing in while so many petty and mindless changes are being made to them.

Now THAT'S pension simplification!!!

But on a more serious note, this whole debacle has (in my opinion) missed the point totally. The so-called "emergency budget" and all of the associated hype appears to me to be attempting to address the current actual (or crystallised) debt.

It is just a free shot at the previous government. The right idea for the wrong reasons.

But even then the government have still failed to fully grasp the nettle.

What of the pension debt that continues to accrue i.e. from the statutory schemes? Currently that is estimated at around £1 trillion. In addition, what is the shortfall in the state schemes? (Has anybody got a figure for that?).

Instead of addressing this, the patchwork and half-baked so-called budget appears (to me) to be addressing the current overdraft only.

Meanwhile the statutory schemes are still relying on members' contributions (where applicable) to fund the pensions in payment - and the shortfall continues to grow.

When these schemes are (inevitably?) scrapped, the shortfall crystallises into hard debt. And in the event of bulk buyouts or individual transfers out, that debt has to be paid off.

The PPF levy will then bankrupt every other scheme. Nobody gets a pension and pensions are not worth investing in.

And there we have it - pensions simplification at its simplest!

Or am I just a cynic?

To those hoping for Simplicity - have another glass of sherry.

HMRC are robustly confusing many with their stance on High Earners and anti forestalling rules particularly regarding the definition of a scheme or arrangement.

age 55 changes and those under 55 and in USP..................

Heres hoping that simplification is on it's way and that the new administration do cut through all this red tape. key points surely are

Rather than reduce the current annual allowance surely it would be easier to just restrict the amount of contribution that higher rate relief can be claimed on, say £30,000 then everything at basic rate.

No age limit on annuity purchase but surely put in place that on death the pension fund must pass down the family line rather than have the option of a taxed lump sum payment. This would be a fantastic way of ensuring that there is less poverty in retirement, particularly with longevity and an increase in the state retirement age and the likelihood of an ongoing income tax stream for HMRC.