• PENSIONSANDSAVINGS.COM

    From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Vital pension and retirement policies delayed – perhaps casualties of Brexit

    Vital pension and retirement policies delayed – perhaps casualties of Brexit

    • As Parliament breaks for the Summer, there are vital issues left in abeyance.
    • Preparing for later life is essential in our aging population, but policies are on hold.
    • Delays in dealing with social care funding leave a worsening care crisis all around us.
    • Pensions Dashboard, cold-calling ban and ensuring low earners aren’t overcharged have all been delayed, despite the urgency.

    Over the past year, Ministers have promised a raft of measures designed to help people build up better pensions, improve engagement with retirement planning and finally act to resolve the social care funding crisis. Unfortunately, as Parliamentary time and official and regulatory work have become overloaded with Brexit issues, many of these vital measures have been delayed. Aegon’s latest Survey reports that almost 80% of people are worried about the Government being so focussed on Brexit that other important policies are downgraded.

    Brexit has delayed measures to tackle the social care funding crisis:  The biggest problem of all is the ongoing failure to tackle Social Care Funding. Each day that passes, more people are losing out in our broken social care system. There is no money set aside to deal with the costs of future care and despite promises of a new Green Paper, nothing has happened. The paper was originally due in Summer 2017, then delayed to end-2017, then was promised before summer recess this year and now is said to appear in ‘autumn 2018’. This is one of the biggest problems of retirement planning – with nobody setting aside any money to help pay for care. A range of solutions is required – with, for example, consideration of allowing tax-free pension withdrawals to pay for care, allowing some ISA savings to be earmarked as a Care ISA fund that can pass on free of inheritance tax, a system of national insurance, perhaps a national equity release scheme, so that the risk of care funding is pooled, rather than falling only on those needing care.

    Pensions Dashboard project on hold and may be scrapped:  Much to the concern of those eagerly awaiting the chance to put all pension information in one place, the DWP seems to have changed its view on the pension dashboard, having originally committed to introduce it by 2019. There are rumours that the DWP no longer wishes to be directly involved. This is a significant disappointment as most people have many different pensions and often lose track of past pots. Having the chance to see their pension savings all in one place would help improve engagement with pensions. The Government said it would facilitate development of the dashboard, but it seems no longer committed to this. It could be that problems with data and past errors are to blame, but could also be that officials are so occupied with other matters, including Universal Credit and Brexit, that they have no time to devote to the Dashboard. A petition has been started calling for the project to be saved, and has nearly reached 100,000 signatures in just a few days.

    Lack of solution to ensure lowest earners are not overcharged for their pension:  Many auto-enrolment pension schemes operate on an administration system which forces the lowest earners (anyone earning less than £11,850) to pay 25% extra for their pension, because the scheme does not add the tax relief they are entitled to. The Treasury, DWP and Pensions Regulator have been asked to resolve this scandal, but have said that it is too difficult and are not devoting the time needed to sort it out. This leaves low earners being penalised unfairly, just because their employer’s scheme uses a particularly type of administration for its tax relief.

    Pensions cold-calling ban was promised by June but we just have another consultation:  The Government has failed to meet its deadline to introduce a much-needed ban on cold-calling by end-June. Having announced the measures are delayed, it has now issued yet another consultation on the measures. It is vital that a proper cold-calling ban is introduced as soon as possible. While the problem is not tackled, more and more people are at risk of losing their life savings in pension scams. The ban on pensions cold-calling was first promised in 2016 and yet is still not in place.


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