I have just read and re-read, in these very pages, an excellent attempt by James Hay head of technical support Neil MacGillivray to explain the tapered annual allowance – a subject close to our hearts here by the affluent and leafy banks of the River Thames in Henley.
It is a subject we discuss with clients all the time and one which I thought I really understood. I still think I do, in fact, but it jolted me into realising what a hapless job this can sometimes be.
Honestly, the most common reaction to this little gem of legislation is one of utter disbelief that the rules could be so convoluted and spiteful. “Why would anyone design rules like that?” is another popular response. And, frankly, I am completely with them.
It calls to mind the Radio 4 comedy show “I’m sorry I haven’t a clue” – the bit where the contestants play the Mornington Crescent game where they try and pretend said game is something real, and not just completely made up twaddle.
With its fiendishly complex rules and tangential twists and turns, the panellists sound impressive, and occasionally funny, in their deep understanding of the game which, presumably, is designed to make us feel like inadequate plebs – in a humorous way, of course, because Mornington Crescent is not real and it is perfectly OK to not understand it.
Unlike the real world, where we find truth is in fact stranger than fiction and we are compelled to play along with a comedy-horror show of errors that is current pension legislation.
Take your pick of any number of unfortunate subject matters (and there are plenty to choose from). But the honour for now goes to the pointless and almost unfathomably complex tapered annual allowance.
I know some of you will be shouting that this is what we are here for – to explain complex notions in simple and easy-to-understand terms. But how much better would it be if we did not have to wade through such nonsense, instead being able to concentrate on the important things in life?
Such confusion tends to affect higher earners, who are quite often business owners. It is their cynicism and resignation that filters down through the rest of the workforce. It is that frustration that permeates the discussions that could otherwise be so positive – for we all know that, currently, pensions are actually top dog.
You only have to read one of the Sunday Times’ Money section interviews on the back page where they ask: property or pension? Almost every week, it is property. That has to be a clue for someone.
It is now so bad that I find myself fantasising at the prospect of pension simplification (yet) again. We must surely be at “peak rule” by now, mustn’t we? What with Mifid II and the Global Data Protection Regulation?
If we all say it enough, maybe someone with some kind of influence will realise that all this stuff, which sounds remarkably like a game show, is probably putting people off. Instead, they will turn to more flavoursome solutions like Bitcoin, gold futures and car parks in Dubai in order to make up for the lack of clarity in pensions.
Money is like water – it will find its own way in the end and there is nothing you can do to stop it. Make pensions impermeable and this is the result.
Tom Kean is director at Thameside Financial Planning