Now just hold on a minute, has the coalition actually done rather a good job with pension reform so far?
In the first of a series of 'Top 5 of 2010' articles we will be running in the build-up to Christmas, IFAonline examines the key moment in pensions this year...
This has been one of the most dramatic years in the history of pensions.
Pensions minister Steve Webb has been dubbed ‘The Great Reformer’ and industry experts agree the coalition government is pushing through fast reforms on an unprecedented scale.
Here are our top five changes:
1) NEST and auto-enrolment
In November, Webb announced the coalition would press ahead with Labour's original plan to create a national employment savings trust (NEST) and auto-enrol everyone earning £7,475 and above from next April into either that or an employer scheme if one exists.
The proposal is the first significant effort to push the majority low-income workers into a low-cost workplace pension. It also marks a shift away from state benefit reliance and toward ‘liberal paternalism' in encouraging pension saving with a ‘nudge' from government.
Some continue to have reservations about the compulsion element of auto-enrolment, but the size of the savings gap has so far drowned out these concerns.
2) Removal of age 75
For years, the requirement to buy an annuity at age 75 or face massive tax charges has been a controversial rule, and seen as HMRC dictating to pensioners how to manage their money.
From June, some pensioners have been able to put off annuitising to age 77, and from April next year, there will be no requirement to annuitise at all, provided pensioners meet a minimum income requirement.
The move has been welcomed by the wealthy, for whom annuities were poor value for money.
3) State pension age increase
The Labour government had been increasing the state pension age (SPA) to 66 in 2026, 67 in 2036 and 68 by 2046. In October's spending review, new Chancellor George Osborne revealed he would begin increasing the SPA in 2016, meaning it will reach 66 by 2020, six years ahead of Labour's original timetable.
Whilst some recognised the SPA had to rise due to increased longevity, others have attacked the move as disproportionately affecting women, for whom the SPA will rise faster.
However, the coalition stopped short of cutting other pensioner benefits such as winter fuel payments and free TV licenses.
4) Tax relief
Tax relief remains one of the most complicated areas of pensions. The coalition implemented new limits to simplify the rules. The annual allowance on contributions was reduced from £255,000 to £50,000, whilst the lifetime allowance was reduced from £1.8m to £1.5m.
The move was considered fairer as, in the previous system, higher net worth people received the majority of tax relief by paying huge sums into their pension funds.
However, IFAs warned the self-employed, business owners and people in final salary schemes may be caught out unfairly by the £50,000 limit.
5) The Hutton Report
The government commissioned John Hutton, the former Labour minister, to examine the state of public sector pensions. In October, Hutton's interim report (with a full report due in April 2011) called public sector pensions ‘inherently unfair' and suggested a move away from final salary arrangements and towards a career average model.
Though public sector workers argued in many cases they had taken lower pay in the public sector in return for excellent pension benefits, the general reaction from the industry was that public sector pensions are an unaffordable ‘Ponzi scheme' that must be cut, particularly during the age of austerity.
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