AJ Bell chief executive Andy Bell has asked the government to create an independent pension tax commission and give the pension industry a 10-year ‘no-change’ guarantee.
In a letter to Chancellor Philip Hammond and pensions minister Richard Harrington, Bell (pictured) called for the creation of a non-political review body, similar to the Turner Commission, which should evaluate pension saving incentives in the UK.
The body would be tasked with assessing whether reforms of the existing pension tax relief structure were needed and if so, which way the government should go.
Any recommendations made should then form the basis for a lasting, cross-party settlement on pensions tax relief, and should come with a pledge not to make any further changes for at least 10 years, Bell wrote.
MPs had already called for an independent body to provide coherence in pensions policy, last year.
Bell’s letter comes ahead of the Chancellor’s Autumn Statement on 23 November, which, he said, had already created speculation around potential further pension tax relief reforms. This was undermining investor trust in the stability of the system and deterring them from saving, he said.
The Turner Commission, which had formed the basis for increasing the state pension age and the introduction of auto-enrolment, was “a great example of how a non-departmental public body can facilitate a lasting agreement” that outlasts both budgetary and government changes, Bell wrote.
Simplifying ISAs
Bell also criticised the current ISA system for being overly complicated. The successive creation of six different ISA ‘brands’ had confused and deterred savers, he said.
He said: “ISAs have been the savings success story of the past decade, but the plethora of ‘brands’ with different limits and clauses attached risks undermining one of the product’s key strengths – simplicity.”
Bell suggested these variations should therefore be merged into one product but with a varying set of rules, still enabling the government to achieve its goals.
Further complexity after annuity U-turn
Bell had drafted the letter prior to the government scrapping its plans for a secondary annuities market earlier this week.
The firm said the latest U-turn further stressed the need for simplicity and stability with pensions.
A spokesman for the firm said: “The complete U-turn on the secondary annuities market is a perfect example of the constant chopping and changing of Government policy around pensions.
“This unsettles people and they lose confidence in the system. A period of certainty and stability would do more to encourage people to save via pensions, rather than further tinkering with Government incentives.”
Industry players expressed concern about the move on 18 October. Dentons Pensions director of technical services Martin Tilley, for instance, said the government should run reforms through a “closed industry forum” for stress-testing before opening it out to consumers.
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