And we still do not know. Even the pensions minister does not know. The fact remains that increasing the number of pension savers will have a knock-on effect and the Treasury is bound to want to limit the amount of tax relief that will be lost to them in the future.
Add to this a government with continuing debts and the pressure to make a change is unlikely to go away. The political sweetener in this is the offer of fairer distribution for basic rate taxpayers and a simpler framework for consumers to understand. Much of the complexity in current pension planning is the result of constant tweaking of the existing rules rather than an overall saving policy and this should be addressed. All in all I suspect it will be a case of whether a review will happen in 2017 or later in this term of government.
What (probably) will not happen
The auto-enrolment review will include “an opportunity to strengthen the evidence around appropriate future contributions” but the DWP “do not expect” to announce any decision on this in 2017. This has already been termed “the elephant in the room” as it could have a greater impact on financial position of pensioners in retirement than any of the others discussed. It is understandable that the government would want to take time to get this right but it’s too important to be put off.
Fiona Tait is pensions specialist of the Royal London Group
