“Christmas is bitter sweet for me as, when the clock strikes midnight on Christmas Eve, my age clock ticks over a full year, and this year, it takes me into my 50th year too. Not that I am bothered. Honestly.
“Not so long ago, when early retirement was possible at 50, I could have been just 12 pay days from being able to call it a day – something which, when I was a young starter at Sun Life, had seemed like an eternity away.
“Yet here I am, albeit the retirement goalposts have moved in the intervening blink of an eye. If I knew then what I know now, I would most likely have started paying a little bit more into pensions a bit sooner so that I would have the best chance of having a reasonable pot of money by the time retirement came.
“What I would like under my Christmas tree this year is for all of the young starters of today to realise the value of savings – pensions included – that they fully engage with auto enrolment as an absolute minimum and put down sustainable foundations to ensure that when they get towards retirement they can do so with some comfort and security. Time flies by too quickly. That’s’ Christmas sorted. Now, for my birthday…”
Standardise non-standard investment reporting
Talbot and Muir director David Bonneywell
“Given the negativity towards SIPPs due to the rise to prominence of the so called ‘toxic’ non-standard investments (NSIs) that have featured in the recent Berkeley Burke High Court case and will rear their head again in the forthcoming Carey Pensions case, I would like to see some positivity for 2019 and in particular I would like to see the SIPP industry come together and standardise the reporting of NSIs to make it easier for advisers and their clients to compare providers.
“Comparing SIPP providers isn’t as easy as it should be and it is vitally important to the due diligence processes that advisers have in place. This due diligence ensures that clients are with a provider that can be considered ‘safe’ and which hasn’t stored up significant issues which may have a detrimental effect on service standards.
“It is possible to report on NSI holdings in a uniform way so it is easy to see what is ‘under the bonnet’, just a standardised set of questions that everyone uses. So come on Santa, please put that under my tree.”
“I am told that I must stick to retirement and pensions which I guess means the New Zealand rugby team is out… Failing that, I’d like to see working pensions dashboards. We know the initial version will not be comprehensive but there is an opportunity to get the first version out there and start to show savers what information they are entitled to receive. It is essential that consumers are told this is just the start and that full participation is on the way. It may take 3-4 years but this is nothing in pension planning terms.
“A review of minimum contribution levels under automatic enrolment would also be welcome. This is arguably the most successful pensions initiative in living memory and we should build on this so that it delivers what it says it will – adequate pensions in retirement. 8% of band earnings is a start but not enough for most savers.
“I’d also like to see a consultation into the inclusion of self-employed in automatic enrolment (AE). There have been a number of suggestions as to how this could be done but no official research and assessment. Another Pension Commission would do it, although hopefully quicker than the original now that AE is actually up and running.
“Finally, I’d like a Pensions Commission investigation into family pensions. Pension provision is still very unequal between men and women, and this is likely to continue so long as we keep having offspring. I strongly believe that the role of child-carer can be taken on by either parent not necessarily the mother, however whichever it is research shows that the effect on their earnings, and hence their pension, is likely to be life-long.”
“When I sit down to open my presents on Christmas day I would rather like to find George Clooney, but if he isn’t under the tree, then the abolition of the second test at age 75 for the lifetime allowance (LTA) would be the next best thing. The first LTA test applies when there is a benefit crystallisation event such as using income drawdown. The second LTA test applies at age 75, but this feels like a double whammy and penalises those who have had investments that have done well. The real reason that I would like to see it scrapped is that as more and more people take advantage of pension freedoms, we are going to see an increase in the number of people being caught by the second test at age 75.
“Those using an adviser will most likely have been warned about this and have planned for the potential tax charge – the adviser will have kept them abreast of the changes to the annual allowance. But for those who aren’t aware, it could come as a nasty shock and could yet again knock confidence in the pensions market. So please can we help consumers and see off the LTA second test at age 75.”
“What I’d like to see under the Christmas tree this year is a stack of positive headlines for SIPPs and the pensions market for 2019.
“This year may have seemed a rather turbulent year for the market, but it also felt like a turning point: there was a sense of long standing issues being addressed and ironed out. Activity around the conclusion of the Berkeley Burke and Carey Pensions cases, and the FCA’s Dear CEO letter and request for information from SIPP providers, should lead to a stronger, better SIPP market going forward. The Retirement Outcomes Review final report also provoked a lot of discussion this year, and in early 2019 the FCA will reveal its plans for how we can start to drive better outcomes and help make sure the pension freedoms are really working for consumers.
“There are always unknowns, of course, and it remains to be seen exactly how the ongoing political uncertainty may affect pensions. However, on the whole the outlook seems good, and it will be great to see positive developments and stories around pensions to help reverse the tide on some of the negative sentiment from the past few years.”