Government handling pensions ‘incorrectly’
Having done so much to introduce flexibility into the pension market and potentially boost pension saving, the government looks set to undermine its effort with its recent proposals, with indications being that the generous tax reliefs attached to pensions will soon be lost, says Matt Phillips, managing director, Thomas Miller Investments
The Government risks undoing its good work to date achieved through pension freedoms by making pensions less attractive.
They are handling pensions incorrectly and not addressing the real issues. While a much needed simpler and transparent system is required, the Government has not dealt with the issues that will continue to remain.
Financial education is lacking and has been for as long as I can remember. The Government needs to get to the root of the problem, which is a general lack of understanding among consumers on financial planning. Work should also be done on changing the mindset of people and improving the perception of the industry. These have been long-term issues and will persist unless tackled.
The pensions system needs to be left alone, yet this Government is signalling that, like all Governments before them, they are going to continue to tinker with pensions.
We are now having to encourage all savers, particularly higher rate tax payers, to take time to review their pensions following a Government consultation paper on pensions tax relief. This is yet another clear indication that some of the generous tax reliefs that are attached to pensions are going to be lost in the near future.
Since the introduction of pension freedoms the Government has continued to meddle and seems determined to carry on doing so. Having made them really attractive they are now merrily sending out different messages about pensions, which will only turn people off them once again.
We need a period of stability and clear direction, not rumours and ambiguity. If advisers could be left to advise clients on saving more for their retirement, then we will all become a lot less likely to rely on the state in the future.