The industry has lobbied furiously since December against the punitive pre-Budget proposals for alternatively secured pensions, which many commentators argue will effectively kill off the product as a viable alternative to annuitisation.
Just to refresh your memory, the Treasury imposed a massive 82 per cent tax on death benefits from Asps (including IHT) ensuring the product cannot be used to pass money to loved ones on death. It also introduced a high minimum income requirement of 65 per cent of the annual amount of a comparable annuity for a 75 year old.
Despite the fierce criticism heaped on the Treasury, combined with repeated attempts to demonstrate that the net tax take from Asps is in fact higher than for annuities, it would seem the lady is not for turning.
This was evidenced again last week, when the Treasury Chief Secretary Ed Balls refused Tory demands to reveal the fiscal calculations behind its Asp crackdown and said that doing so would be “prejudicial to the frank and candid discussions that are an essential part of policy development.”
All this has served to dampen hopes that the Government will do any more in the Budget than tinker with the minimum and maximum income parameters.
Indeed, there appears to be an overwhelming feeling of resignation, even among those that have been at the forefront of the campaigning.
Hargreaves Lansdown’s head of pension research Tom McPhail, for example, says the Government’s skewed rationale for introducing special rules for religious groups meant the industry never stood much of a chance of getting them to budge with rational argument. But, he argues, the industry had to give it a go and he is still hopeful the Treasury will allow more flexibility on the minimum and maximum incomes.
Syndaxi Financial Planning argues the industry has been “politically na” in thinking the Government was ever going to back down – as it has made its aversion to pension schemes being used for estate planning just as abundantly clear as its somewhat dogmatic fixation on annuitisation.
Following on from last week’s comments from Hargreaves Lansdown’s co-founder Peter Hargreaves about advisers missing out on the Sipp bonanza because of their addiction to indemnity commission, the firm has gone to ever greater lengths to ensure it gets the biggest slice of the Sipp cake possible.
The firm has hired a marketing company, kitted them out in Hargreaves Lansdown T-Shirts and sent them off to Canary Wharf tube station to persuade City big wigs to plough some of their bumper bonuses into a Sipp. The firm handed out 6,000 leaflets and says it has already won business as a result. It plans to repeat the exercise next Thursday at the same tube station and has printed out 12,000 more leaflets.
This, perhaps, highlights the potential for growth in the Sipp market but also underlines how competitive the marketplace has become – particularly for those advisers that have so far missed out on the so-called bonanza.
It also highlights the fact that commuting in London today has become a veritable minefield, with Hargreaves creating the London Lite of Sipp marketing literature. Which enterprising firm is going to launch the London Paper equivalent?