This Easter, I found myself in Bahrain. The family were there for the fortnight but poor old dad was restricted to flying out late on Thursday and back overnight Monday.
While there, my daughter and son insisted I rode a camel or my trip would be incomplete. After my children and their cousins survived the trip along the beach, I decided to climb on board and grasped both the front and rear of the saddle (a bit of advice – grabbing the front generally results in the over-the-handlebars effect).
I must have given the camel owner the impression of being an expert as he then dropped the reins and gave the rump of the camel a hefty thump.
Off we went at breakneck speed, with me suggesting, in a somewhat concerned manner, that he should grab the reins sooner rather than later.
This incorrect assumption of experience seems to have surfaced not just with camel owners but also with stakeholder and the Government's strategy regarding long-term savings.
Its (and previous Governments') determination to stick with a “use it or lose it” strategy over allowances results in decisions being made in the run-up to the end of the tax year that have little to do with effective planning.
In my opinion, it simply stimulates the product-led approach of the major pro-viders. The rigidity that comes from a structured product tries to enforce a regime of savings that simply does not fit many individuals' current lifestyle.
The rise in the number of people paying as much as £150 a month for gym membership shows that, with sufficient promotion, the concept of getting fit has reached a large section of the population.
Getting them to the same degree of financial fitness takes not just the same effort but also recognition that flexibility is key. Just as some people train alone (is this not the true form of execution only?), many use personal trainers to benefit from their advice and expertise.
If we are to find the same “coaching” role as IFAs, then we need the Government to provide the promotion of financial health as well as physical health and the move away from “use it lose it” allowances is an integral part of that promotion.
The Inland Revenue could still cost the allowances on a basis of use in that year and, where tax relief applies, even tie the rate of relief to the year in which the allowance was granted and not used.
I made this suggestion to the Pickering review as I felt that we only really need two types of pension vehicle – defined-benefit and stakeholder – as the complexity was a barrier to delivering the flexibility that would encourage greater savings towards retirement.
Couple that with the option to borrow from funds, as under the ubiquitous 401(k) in the US, and I believe we can start to see the growth in savings that could make compulsion less necessary than at present.
Providing this advice postpolarisation could see the fees falling foul of VAT and here is where I would like to make a suggestion.
If the fee were subject to VAT but the individual was given relief at source at the same rate as the prevailing rate of tax, then the problems raised by VAT becomes administrative and not financial.
This kind of forward thinking is what we need and I will be promoting this concept to the powers that be over the next few weeks and I would welcome your comments.
Now that my camel-riding days are over, perhaps the run-up to April 5 next year can be less fraught, especially if the Government takes notice of my pleas.
Robert Reid is principal of Syndaxi Financial Planning