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Steve Bee: The damage to our pensions system is already done

steve bee

I have no idea what is going to happen to our pensions system in next week’s Budget but like everybody else I have read about the rumours. Pension tax relief reform might have been put on the back burner but speculation remains as to whether the Chancellor has any more rabbits in his hat.

Saying that, it really does not matter what changes are wrought on Wednesday. I fear the damage to our pension system is already done. That happened long ago when the pension freedoms were announced. At that time there was something of a media frenzy; the issue dominated the papers and airwaves. A real revolution had happened in the erstwhile sedate world of pensions. An overnight coup.

I was as pleased as anybody that the annuitisation rules had been scrapped. Indeed, I had been calling for such a change for almost a decade. But I was shocked at the way it happened: a few unexpected words in a Budget speech and the certainties of pensions were changed forever.

The way such huge changes were introduced made me realise just how frighteningly fragile our pensions system was. I could not get that out of my head.

When I finally came around to being able to write about the freedoms, I highlighted my fears for the future. A future we are currently experiencing. A future where fundamental changes to our pensions system could be made at the drop of a hat. A future where no one would ever know for sure just what the rules and regulations would be in a few months time, let alone decades hence when lifelong savings plans come to fruition.

Maybe more changes will happen this year; maybe they will not. But, as I said, I do not think it matters now. Everybody knows our pension system is not stable any more.

Steve Bee is director at Jargonfree Benefits

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Above all others, the one message that G.O. needs to take on board is the need for stability. How can he expect anyone to have any confidence in pension saving when he’s constantly moving the goalposts?

  2. Pensions were damaged years ago and have been consistently undermined with the relentless tinkering that has gone on ever since the 1st introduction of SERPS back in the 80’s. Those pensions were far from perfect but the effects of constant meddling and the pursuit of trying to perfect the ideal system is a bit like cosmetic surgery…the pursuit of the ideal appearance..it has rarely ever worked and in many cases permanently and irrevocably b*****d things up for good.

  3. No better endorsement of Steve’s point could have been made by July’s “tax incentive” consultation. It should have come with a flag saying “look people, we can change it anytime we want and 10 years is a backstop!”

  4. Like it or not, the UK is in debt and our demographics etc. will place ever more strain on the public purse in coming decades. Both private pensions and state pensions will be raided on an ongoing basis as there is scope to cover much of that activity under a cloak of technical obfuscation. Gordon was very good at it and George has learned from that. This appropriation will not be pretty but it is guaranteed.

  5. Better to know that the pension system is unstable than to naively think it isn’t.

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