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Breach barriers

James Ward, Director of UK corporate, Friends Provident

With 2010 under way, I am full of optimism that the year ahead will bring some long awaited, much needed solutions in the pension arena. I have to admit that my confidence was knocked somewhat when Chancellor Alistair Darling took the floor to deliver his pre- Budget report last December and, just for a change, decided to move the goalposts.

His speech was a signal that yet again the Government was going to use pensions as a political football. The last thing the industry needed was another attack on pensions and I was full of hope that Darling would avoid this. But alas this is exactly what we got with the announcement that the limitation on higher-rate tax relief on pensions would be extended to those earning over £130,000.

But I am determined that 2010 should be a different ball game and my one hope is that it emerges as a year of consistency. It’s high time that our esteemed political leaders – in whatever shape they surface after May – start pulling out all the stops to encourage people to save and stop putting up barriers to prevent this.

I am pretty sure if we did a straw poll across our schools to measure attitudes towards pensions and savings, the first question these bright young things would throw back at us is, why should I save? I am not yet certain that the financial services industry could answer this convincingly, never mind consistently.

Instead, the constant tinkering around the edges of our pension system by the Government is, I believe, only chipping away further at consumer confidence.

We need to move away from this and start highlighting the benefits of saving into pension schemes.

Some have mooted that it is the pension label which is the biggest hurdle to overcome and that a different, more conceptual name would incentivise people more but I think we need to look further than the label and start with a clearly defined mandate from the Government.

We need to recognise that it is those people earning over £130,000 who are the very people tasked with making decisions about setting up company pension schemes. And if they end up becoming disenchanted with their own pensions, then they are less likely to be inclined to instigate contribution arrangements on behalf of their employees.

A tax raid aimed at hurting the rich is not only inconsistent but could also mean more than those intended lose out. And if that is not a case for consistency then I don’t know what is.

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