AEGON Industry Blog

Pensions Reform – Keeping it simple

Tue, 24 Aug 2010 13:04:32 +0100

The independent review of the scope of automatic enrolment has now closed and the pension industry waits in anticipation to hear the recommendations Johnson, Yeandle and Boulding will put to the government at the end of September. At AEGON, we’re supportive of the principle of automatic enrolment, but like many in the pension industry, have concerns about some of the policy detail and the complexity for employers. The biggest area of pension industry consensus is to increase the earnings threshold, but once beyond this, base contributions on the total, not band earnings. We’ve suggested the threshold should rise to around £10,000, allowing voluntary joining for people with lower earnings. Making these very simple changes has a big impact on making it pay to save, as it removes a substantial number of people from automatic enrolment who otherwise may be caught by the means-testing trap in retirement.

A taxing summer for pensions

Wed, 28 Jul 2010 14:26:00 +0100

The long hot pensions Summer of 2010 continues. Parliament rises this week and Government departments are pressing ‘send’ on an array of documentation, presumably as their last act before switching on their out-of-office messages and heading for the beach. One person’s sent box is another’s in-tray.Yesterday the Treasury issued the latest instalment of its work on restricting pensions tax relief, as part of a pack of nine (yes, nine!) consultation and discussion documents on reforming the tax system. They want input by 27 August.

Now access really will be more flexible …

Fri, 16 Jul 2010 12:40:18 +0100

After an hour spent in one of the Treasury’s darker corners, industry representatives and other interested parties emerged blinking into the sunlight of Horse Guards Road on Thursday lunchtime, clutching in their eager hands a copy of the government’s consultation on ‘removing the effective requirement to purchase an annuity by age 75’.It’s got to be good news that this area is receiving attention. The rules around retirement are stuck in the past and haven’t kept pace with increasing longevity and changing lifestyles.

Competence and ethics – CP10/12

Mon, 05 Jul 2010 09:15:00 +0100

With all the excitement created by the issue of CP10/14 on professionalism, it’s easy to forget that a few weeks earlier the FSA published an equally important consultation paper (CP) on competence and ethics. Only a few appear to realise that the RDR principles extend beyond the adviser. CP10/12, on competence and ethics, is a good example of this extension. The CP reminds the market that the FSA is increasingly focusing ‘…on the competence of individuals at all levels within a firm’ and lays down the ethical behaviour it expects from all, not just advisers.

Professionalism and the RDR – CP10/14

Wed, 30 Jun 2010 15:01:00 +0100

On 28 June 2010, the FSA released its latest Consultation Paper on delivering the RDR. CP10/14 covers professionalism, including a statement of its application to pure protection advice.Shortly after I’d completed my initial reading of the CP, a journalist phoned to ask for my reaction. I think I surprised him by being both complimentary but lacking enthusiasm.

Corporate pensions – the final RDR rules

Mon, 28 Jun 2010 14:07:00 +0100

On 25 June, rounding off a busy week for pensions and financial services, the FSA published its final rules on how the RDR will apply to corporate pensions. These are very much in line with the proposals set out in December and reflect the rules we’ve already seen for the individual retail market.Consultancy Charging – the corporate pensions version of Adviser Charging – will replace commission for new schemes. It will be agreed between the adviser and the employer and applies whether or not members are provided with personalised advice.

Pensions Reform: Making sure it ‘pays to save’

Thu, 24 Jun 2010 15:08:00 +0100

It’s been a busy week for pensions. Earlier this week we had the budget announcements proposing a reduced annual allowance instead of the complex 2011 pension tax rules and a review of the retirement rules. And today Steve Webb outlined his intention to carry out a ‘thorough and speedy review’ of the Pension Reform rules for automatic enrolment, while confirming the government’s commitment to the 2012 start date. I’m delighted with both statements. We’ve always supported automatic enrolment, we don’t want any delay in implementation of the reforms, but we recognise that certain elements of automatic enrolment could be improved.

Emergency Budget – a season of reviews

Tue, 22 Jun 2010 16:49:00 +0100

In my blog last week I explained how I felt cautiously optimistic ahead of today’s emergency budget. The good news is I still feel the same. Before the Budget, the pension industry was very concerned about the previous government’s complex pension tax rules for the highest earners, which were due to be implemented in April 2011. AEGON, along with other stakeholders, had lobbied hard against these, preferring a reduced annual allowance that would have been much simpler but raising the same amount of revenue. It appears the government has taken on board our arguments.

Emergency Budget – Still time for a pensions rescue

Tue, 15 Jun 2010 09:01:00 +0100

George Osborne and his friends at the Treasury are busy drawing up plans for the emergency Budget on 22 June. As usual there’s a frenzy of speculation about what this will cover. In recent weeks leading politicians have been warning us that hard decisions have to be made and that ‘we’re all in it together’. And this includes pension savers.In previous years, the pensions industry has seen gradual dismantling of pension tax simplification, culminating in cutting pensions tax relief for the highest earners in last year’s Budget. Will it be any different this year, when we know the government has to raise money to pay off its debts? There are constant worries about whether the government will make further cuts to pension tax relief and the effect this will have on pension savings in the UK. So far we’ve heard nothing about the Liberal Democrats’ manifesto policy to remove the higher tax relief on pension contributions and replace it with basic tax relief for all pension savers. Let’s hope it stays this way.

“Platforms – master or servant”

Mon, 07 Jun 2010 12:11:00 +0100

Last week I submitted AEGON’s response to the FSA’s Discussion Paper (DP10/2) on platforms. In general, I believe the FSA has done a good job with the DP and was therefore surprised to read others dismissing the proposals as ridiculous. In my view this reflects a misunderstanding of how fundamental certain core values are to the RDR. It’s also difficult to see why a ‘service’ (which the FSA has confirmed platforms are, as opposed to a product) should be excluded.