Two pension White Papers, a crackdown on inheritance tax and U-turns on pension term assurance and alternatively secured pensions marked an explosive year for financial services at Westminster.
The pension industry spent most of the year warning the Government of the disastrous effects that its proposals for personal accounts could have on existing provision, leading to significant concessions in the December White Paper.
But some still warn that ringfencing transfers until 2020, creating a kitemark for good schemes and giving the delivery authority the statutory objective of ensuring that existing provision is not eroded may not be enough, with the Government’s own figures estimating that £3bn a year could leave existing schemes.
Although the Government has moved significantly in this area, concerns remain over the lack of advice, the effect of means-testing and suitability.
The consensus over reform of the state pension looks less and less likely of extending to personal account,s with the Opposition parties becoming more vocal on these issues.
The Government’s stubborn refusal to give more help to victims of occupational scheme wind-ups threatens to undermine the public’s confidence further in these reforms.
The first of a number of surprises came in March when Chancellor Gordon Brown clamped down on IHT by abolishing potentially exempt transfers for gifts to trusts.
The move led the industry to scurry to its defences to ensure that policies were not hit retrospectively and gave the Conservatives plenty of ammunition to attack the Chancellor.
Asps were next in Brown’s sights, with right-hand man Ed Balls announcing a crackdown would appear in the pre-Budget report and the Chancellor introducing spoiler tax charges of up to 82 per cent on death benefits,
But unexpectedly, Brown also launched his clunking fist at stand-alone PTA, indicating he was removing tax relief on the product, with the Treasury claiming the product was being marketed outside its original intentions.
The Tories had their own internal tussles with David Cameron and Shadow Chancellor George Osborne tactically refusing to commit to any tax cuts despite pressure from within the party.
Right-winger John Redwood was given the job of heading up the party’s economic competitiveness review and its proposals, which could include dramatic reductions to adviser regulation in certain circumstances, look like conflicting with Cameron’s agenda.
The LibDems ditched their 50p in the pound mantra with a radical shake-up of tax policy, calling for all pension tax relief to be cut to basic levels, slashing the basic rate of income tax by 2p, ending compulsory annuitisation and bringing in IHT relaxations.