I recently attended one of Skandia’s typically informative and useful roadshows. Among the presentations was one on retirement planning for
high-earners, covering all the wearisome complexities of contributions for people earning over £100,000 a year and, dear, oh dear, isn’t it just so horrendously complicated? My head was starting to nod.
The presenter suggested that a Conservative Government is unlikely to make things any better for the simple reason that they are going to need to raise every penny of tax revenues they possibly can. On the pension front, we may well be stuck with Crash Gordon’s legacy of having completely screwed up pensions for another halfdecade, if not longer.
But, when you think about it, this need not be the case. With annuity rates at an alltime low and set to stay that way for the foreseeable
future, anyone who can afford to must surely be putting off vesting their pension funds to provide an income that would be…taxable.
If the annuity trap were scrapped, not only would more people vest their pension funds but the pensions being paid from those funds could also well become higher, the result of which would be…more tax.
Meanwhile, the Government continues to wring its hands about the relentless decline in retirement saving but instead of addressing the reasons why people are turned off pensions, presses doggedly ahead with its plan for quasi-compulsory Nests, imposing on employers yet
more expense and bureaucracy. Is this what we need as the economy emerges from its worst recession in decades? I hardly think so
If only these wretched people could see the wood for the trees, we might just be able to look forward to better retirement prospects. But, as ever, there are none so blind as those who will not see.
Our lives are frittered away in detail. Simplify, simplify. (Henry D Thoreau).