There was a time when announcing a pension seminar was a sure fire way of emptying a room. Today things are different. Pension seminars are packed to the rafters with people absolutely hooked on getting details of the new freedoms. How times change.
While I am pretty happy with the way this has turned out and really pleased to have lived to see the day pensions finally became acceptable dinner-party conversation, I am also very unhappy – gutted even – to see some of the other changes being introduced at the same time.
It seems to me we may have finally got the pension system we always wanted but at exactly the same time we are seeing the beginning of the end of it.
A few years ago we had something called A-Day. You might remember it. Before A-Day we had three different pension regimes: different pension rules and regulations applied to you depending on when you started saving for your pension. It was not only complicated and brain-numbingly hard to understand, it was crazy.
The amazing thing back then was that our government types thought it was crazy too and decided to simplify the pension system once and for all. The three regimes were swept away in the name of simplification and replaced by just one regime and an entirely new concept: a maximum amount someone could put into their tax-relieved pension pot while they were living and breathing on the planet – a lifetime allowance. Once you had filled your pot, that was your lot.
Of the three main pension tax regimes we had before A-Day one was really, really generous, one was a bit less generous and the other was not very generous at all. The one regime we ended up with following A-Day was the one that equated to the least generous of the three. I am not moaning about that. It was just the way it was. We all understand that. What I am moaning about, however, is that that least generous pension regime equated to a lifetime allowance of £1.8m.
The recent announcement that the lifetime allowance will be reducing to just £1m means no one in future will ever be able to get a pension that will be as good as the worst regime before A-Day would have produced.
When you hear people referring to the gold-plated pensions of the past that generous employers put in place for their employees, spare a thought for the employees of the future. Even if their employers want to provide them with gold-plated pensions they will not be able to. The golden age of UK pensions is well and truly over.
The new age we are heading for is one where it will be possible to put more into an Isa in a few decades of saving than both you and your employer can put into a pension over the same time.
Steve Bee is director at JargonFreeBenefits