October 2016 - Newsletter
Tax relief overhaul in the pipeline
There has been much speculation the Treasury will look to change pension tax relief in November's Autumn Statement, after chancellor Philip Hammond's predecessor George Osborne dropped plans to include reforms in the March Budget.
Speaking at the Conservative Party Conference, Hammond's PPS, and MP for Salisbury, John Glen gave the strongest suggestion yet that the Treasury could consider changes to tax relief before the end of the year.
When questioned at a fringe event if the Treasury would change pension tax relief in the Autumn Statement, Glen said it would fit into Prime Minister Theresa May's plans.
‘Given the emphasis that the new Prime Minister has placed on assisting working people, then we need to be really clear that there needs to be some serious examination about how we can re-balance incentives towards the lower income strata of our society,’ he said. ‘Because unless we can do that then how are we evidencing our serious intention to [do that].’
When asked by Citywire if an age-based tax relief system, as recently propositioned by Hargreaves Lansdown, would be considered, Glen said the idea would ‘be consistent with a government that wants to help working people’. He added any incentive to encourage younger people to save more, is a positive direction.
‘There is a massive advantage to incentivising young people because the pressures on expenditure for them are much higher,’ he said. ‘So therefore to create an incentive that is significant and that can maximise the advantages of compounding, is clearly a very good policy driver. Whether it can be practically implemented, I don’t know.’ However, he would not commit to any one direction from the Government, adding ‘that all the options are open at this stage’ and said he is not close enough to know exactly what direction the Government will heading in.
Savers failing to seek lump sum related advice
People approaching retirement are having to make challenging decisions about their future plans, choosing between complex and often expensive pension products. But the TUC warned that those on low incomes risked buying the wrong products and called for the government-backed National Employment Savings Trust (NEST) to be given the power to offer retirement income products. The TUC also wants savers to have access to robust, low-cost retirement income products, however commercial providers have been slow to offer these to customers.
General Secretary Frances O'Grady said: "Pension freedom may sound great on paper, but it is not liberating to leave hundreds of thousands of people to fend for themselves in what is now a very complicated and expensive part of the pensions market. "The inevitable result, if nothing changes, is a rise in scams and more older people suffering hardship.
The new pensions minister must set NEST free to offer the sorts of retirement products that are so clearly needed by low and middle-income savers." A Department for Work and Pensions spokesman said: "Pension freedoms are a major success and we remain committed to supporting savers by giving them choice over how they use their hard-earned savings. "Before making a decision, we encourage everyone to speak with The Pensions Advisory Service and Pension Wise, which offer free, impartial guidance to consumers so they can fully understand the options available to them."
Petition formed to prevent cold calling scams
This is not the first time The Telegraph have reported occurrences of pension scams. A survey of 2,000 people conducted by the charity, Citizens Advice, this year highlighted the remarkable amount of people that failed to spot these scams. Nine out of ten consumers chose an offer that included warning signs such as “free advice” and access to pensions before the age of 55.
Darren Cooke, a financial adviser at Red Circle Financial Planning, started the petition after being involved in a television programme broadcasted, regarding pension scams. Cooke said: “I came to the conclusion that the best way to beat the scammers is to starve them of their life blood of new people to scam. Invariably they contact people first by a cold call or email often offering a free pension review and then they get to work. I don't expect a ban to stop them calling but if we can make people aware that the person making the call is already breaking the law, then hopefully they will just hang up and their pension and savings will be safe.”
It is protocol that once petitions have 10,000 signatures they must receive a Government response, and with 100,000 signatures will be considered for debate in Parliament. The campaign has so far reached over 1100 signatures.
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