We Question Pensions Minister at Pension Awards

We Question Pensions Minister at Pension Awards.

Finalist and Runner Up Retirement Planner Awards 2014.

Today our Director, Ashley Clark was invited to and attended the inaugural Retirement Planner Forum and Awards 2014.

The keynote address was made by Steve Webb MP, The Minister of State for Pensions at the Department for Work and Pensions.

Mr Webb gave an insight into Government thinking on pension planning for the UK both for work place pensions, new at retirement flexibility for people about to take their pensions and also the Queen's Speech last week regarding pension changes and yet another type of state sponsored pension called "collective pensions".  Mr Webb also intimated that Government may legislate to even out pension tax relief to a flat rate for all at say 25-30%.

Our Ashley got in with two questions for the Minister in a packed forum at the Le Meridien on Piccadilly.

Firstly, we questioned government logic on offering say 30% tax relief on pensions for all.

Ashley suggested that this would invite people to pay say £70, with 30% relief that would be £100 and then the very next day withdraw the whole amount as 25% tax free lump sum and 75% taxable.

The numbers the very next day being £25 tax free plus £56 (£70 taxable at say 20%).  In short pay in £70 today and get £81 back tomorrow.

Ashley suggested to the minister that this was either crazy or the government would do somthing else e.g. Withdraw Tax Free Lump Sums?

Big question:  In honesty, Mr Webb did suggest that the government where looking at the question of recycling but he did not answer the question about tax free lump sums disappearing.

Second question:  The Queen's speech confirmed that Government is consulting on a new collective pension scheme and speculation has mounted that it may be based upon the Dutch style of state pension where you pay in say €2,400 each year and this entitles you to 2% of a stated, guaranteed pension.  50 years payments = 100% entitlement.  Ashly asked the minister was this a stealth prelude to dispensing with unfunded state pension provision in the UK i.e. the end of the State Pension as we know it.  Not today but say in 50 years i.e. Our children, who do not enter the social security contributions arena for a few years yet, would pay into a new scheme when they are adults and this the burden of unfunded schemes diminishes.

Mr Webb responded by stating the no Government would stop the State Pension in the UK.  In addition, he suggested that as an ageing population we would be asking younger people to not only fund their own pensions but also the unfunded pensions of adults today who will need their state pension paying for.

We remain unconvinced.  Pensioners are the new vote winning electrorate, not younger people.  As the population ages and we live even longer, the Government needs to move to a compulsorily funded scheme.

Runner Up Retirement Planner Award 2014 - finally, we though we might add that at the end of their forum, there was a light lunch and awards ceremony.  After submitting our views and case study materials, we are delighted to say that we were in fact finalists, although, this time we did not win.  We have won a few, you cannot win them all - but at least we know our standards are still as high as they ever can be some 14 years after our first award.