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Adding complexity

Noise about the retail distribution review seems to have subsided as other matters are beginning to shape the distribution of UK financial services.

Against the backdrop of a global recession, one of the things that the Budget delivered was to make financial planning choices more complex.

From Budget Day, people on incomes above £150,000 are being held back from making bigger pension contributions before the restriction of higher-rate tax relief from April 6, 2011.

Legislation is being introduced to stop those potentially affected from seeking to forestall this change by increasing pension contributions.

The anti-forestalling measures, which apply now, come into force where the gross contribution from all sources exceeds £20,000 and income exceeds £150,000.

Tax relief may be restricted to basic rate depending on previous levels of income and pension contributions. If people lucky enough to be in this situation do not need independent financial advice to guide them through their pension options, I will eat my hat.

We have had the Chancellor introducing, for the first time ever, an age cap on tax-efficient savings through an Isa.

Yes, we have had age limits, lifetime limits and annual limits on pensions, but never on investments. For those over 50, the Isa limit is £10,200 from October 6, 2009.

Younger people will have access to the increased limit from April 6, 2010. I am certainly going to hand money to my mum for her to put into an Isa for this tax year in her name.

This is the first time our family money will be passed up the generations and not down. Her grandchildren have their stakeholder pensions in place and money in trust but it is madness that this increased limit is only for over-50s.

We know that savings levels are falling. According to research from IFA Promotion, the nation managed to put away over £103bn in savings during 2008 which marks a decrease of almost 30 per cent to savings levels in 2007 (£146bn).

Talking about IFA Promotion, it has added “find an accountant” to the unbiased portal which already has “find an IFA”, “find a mortgage adviser”, “find a solicitor”.

How wonderful to have all the searches for all the professional advice you may need in your lifetime in one place. All IFA Promotion needs to do now is link to Friends Reunited because if we all had a best friend, a solicitor, an accountant and an IFA, think how happy we would be.

The joint ventures between professional contacts that are possible due to relaxation in the Law Society rules on who can link up with who are very exciting.

While the recession makes people tighten their belts and repay debt when they can and while the regulators try to collect the data they need to regulate and while the Government meddles with pensions and investments, people are increasingly seeking professional advice as this is a complicated world we live in.

Kim North is director of Technology and Technical, kim@techandtech.co.uk

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