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Don’t delay A-Day

The industry is still waiting on simplification details but few want to put back the April 2006 deadline yet again.

Many details on pension simplification have still to be revealed, so surely the idea of moving A-Day back another year would be met with open arms?

But it seems not, with many IFAs and product providers saying the industry has come too far for another delay.

Scottish Life head of pensions strategy Steve Bee has suggested delaying A-Day until April 2007 due to the fact that many details are still “in the biros of the Government scribes”, giving insufficient time to the industry to prepare properly.

These details include the Inland Revenue’s consultation on tax-free cash calculations due later this year and changes still being made to the Pensions Act and the Finance Act.

Bee says: “It is a question of the limited time available to properly advise people and companies.”

Standard Life marketing director Barry O’Dwyer says clarity on the rules is needed as soon as possible but says postponing A-day because of these details would be using a sledgehammer to crack a nut.

Some smaller insurers may be struggling to change their systems in time but for Standard Life the A-Day changes cannot come soon enough.

O’Dwyer says “We are bang on track to deliver for April 2006 and we are very, very keen that it should remain at April 2006.”

He says Standard wants to push ahead for two reasons. First, the pension system needs to be simplified for the consumer as the current complexity puts customers off and stops people buying pensions, which he believes needs to be remedied as soon as possible.

Second, the complexity of the current system is expensive to administer and Standard is keen to see the end of a cost which does not really help anyone and is “dead money”.

“In terms of the processes that we will be able to streamline in April 2006, we are very keen that we make those savings as quickly as we possibly can,” says O’Dwyer.

AWD Midlands regional manager Gordon Hay says there are concerns that the legislation has not yet been made clear and believes it is unlikely to happen before next April.

“But we think the problem is that if we put it off for another year, we are going to be having the same conversation this time next year. We think it would undermine a lot of confidence in pensions just as clients’ confidence is being rebuilt again,” he says.

Hay says there is a big appetite among clients for the new regulations and clients and advisers have been getting to grips with the implications.

Delaying another year would bring product prov- iders more time but would lose the interest and momentum that has been built up for clients, making it harder for them to understand the changes, he says.

Hay adds: “My suspicion is that insurance companies are not quite ready for it. That may be where the concerns are coming from because the administrative systems of insurance companies are pretty much overwhelmed at the moment.

“Even if we delayed it for a year, if all this legislation was ironed out perfectly and went for A-Day in 2007, then no doubt after April 2007 more glitches would be found and there would be more legislation issued. I think it will never be perfect.”

Mark Stopard, a pension specialist in Origen’s research department, also believes there is no going back. He says: “I think now it is pretty close to the point where putting A-Day back another year would cause almost as much work and confusion as sticking with it where it is.”

Stopard says Origen has a lot of work to do before A-Day in advising clients but providers have a huge amount in terms of reviewing systems and ensuring they can cope with the new requirements and are being bombarded with requests for information from clients and advisers.

He says: “One thing that is seriously not helping is that we still have so much uncertainty. The general election has not helped because bits are in one Finance Act and bits are in another.” Stopard adds that Origen has had to be proactive in getting clients to act on the changes as a lot of information is needed. “If everyone decided to look at their position on December 31 before it came in the following April, we would not have a hope of doing it,” he says.

Stopard says product pro-viders are under pressure but feels that all the major pension companies have got programmes up and running, so any delay in A-Day would have cost implications for them.

Clerical Medical technical services manager for pensions Steve Meredith says there are advice issues for IFAs and the longer that A-Day is delayed the more concern there is about what advice they should be giving to existing clients.

He says: “I agree there are some areas that we are not 100 per cent certain about how we should be handling things, certain areas that we have not been told yet, but I do not think that many providers would want to delay because of that. The sooner it comes in the better, get the clean sweep and start with the new processes.”

O’Dwyer believes the main simplification issues are already reasonably clear. “The prize that will come on A-Day is due to the main things over which there is no debate really,” he says.

With A-Day already having been delayed twice before, it looks like most of the industry is sticking to the hope that it will be third time lucky.


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