Each month, we ask our industry to answer one big question!
NICK BLADEN is head of pensions marketing at Skandia.
Anything that can encourage people to address the problem of long-term saving and planning for the future should be a positive step. A-Day has allowed more people to consolidate their pensions so they can truly see where they stand and make informed decisions as to whether their current retirement plans are enough to meet their goals.
It is a pity that the extent of A-Day's success has been somewhat diluted by backtracking on certain issues. But from recent research we conducted, it is still tremendous to see that 50% of advisers reported an increase in pension business since A-Day. Sure A-Day has meant a lot of work, but it has clearly been worth it.
RUTH CLARKE is sales and marketing director at Partnership Assurance
The A-Day changes had a positive impact in many aspects, with greater flexibility and choice now available both of which do much to reflect changing working patterns and retirement aspiration.
Despite recent restrictions introduced in the March 07 Budget, ASPs are a positive development. While affecting inheritance issues, the amendments still allow a more flexible approach to retirement, facilitating matters for those who would like to remain economically active beyond 65.
Some may choose the ASP route in the hope of securing higher annuity rates at 75. Given that, at 65, some 40% of people have an impairment which may enable them to benefit from enhanced annuity rates, by 75 this will be even higher.
Clearly however, in order to benefit from the best rates, the open market option (OMO) must be exercised. Present-day, 15% of people benefit from impaired annuities, this means that 25% are missing out largely through lack of take up of the OMO.
DAVID GREENALL is distribution development manager at Canada Life
If A-Day was to be measured by increasing pension provision then my answer is no and it never had a chance of achieving this.
There will obviously be a number of viewpoints and the difficulty here is agreeing by what criteria we are measuring success.
At the headline level the objective of converting the existing pension tax regimes into one simplified regime has been achieved and future students, administrators and consumers will be grateful now the landscape for pensions is simpler.
However, changes continue to be announced as we saw in the Budget with the removal of tax relief on pension term premiums, so clearly the Government has not finished reviewing and the benefits of providing for retirement via pensions continue to be eroded for the majority. It is this erosion, which really started with the removal of tax credits within pension funds that has affected the attraction of pensions. So regardless of any simplification, without people seeing real value in saving long term in a product that has restrictions on how benefits can be taken, the desired increase in provision will not take hold.
There are some positives, but in the simplest sense A-Day has not been the catalyst needed to grow pension provision.
JOHN HANAFIN is technical consultant at Alexander Forbes Financial Services
Whatever yardstick is used to assess A-Day, it is difficult to state that it was a resounding success. A-Day did not simplify pensions for existing members. Guidance to legislation was issued late and there are still many queries regarding interpretation of the legislation with HMRC and DWP rules often conflicting.
A-Day has failed to stimulate members to increase pension provision or motivate individuals to join schemes. Individuals encouraged when they believed they could use pensions to purchase residential property or could pass on funds using ASP, have now been disappointed.
On the plus side, members do have more flexibility and for employees joining pension schemes for the first time, simplification is welcomed.
From an industry perspective, we can claim success in coping with the unprecedented overhaul of regulations in a limited period of time.
A-Day has encouraged the industry to review its processes with the DWP, Pensions Regulator and HMRC liaising seriously with the industry and in some cases even working together. They have taken into account industry ways of thinking and noted industry comments. This could be the greatest success of A-Day if it continues!
RICHARD MATTISON is business development director at The Pal Partnership
I believe that A-Day would have been a success if it had done what it originally said on the tin, which was to simplify pensions. As we all know this was not achieved, and the pantomime surrounding residential property, ASP, scheme pensions and protected rights, together with confusion regarding employers' pension contributions has served to make something of a laughing stock of the pensions industry, and to further dissuade the public from trusting its hard earned savings with a pension plan. This is a most unfortunate outcome as I genuinely believe one of the original objectives of HM Revenue & Customs was to simplify pensions. Perhaps a positive outcome to the consultation period on IHT and pensions will give the industry a shot in the arm and improve the public's perception.
STUART MEIKLEJOHN is head of propositions at Fidelity FundsNetwork
In the run-up to the anniversary of A-Day, we saw business volumes for our SIPP jump significantly. Recent research we did with advisers showed a consistent experience since April last year, one in four have seen a sales uplift of 60% or more and less than one in ten have new pensions' clients who have not purchased a SIPP.
However, despite the boost in overall sales, there is a strong feeling that there is much more to be done to raise awareness of the post A-Day changes - more than half of the advisers we questioned felt investors knew nothing of the opportunities it brought.
Given all the hype around issues such as residential property or ASPs, some of the key messages may have been missed.
So has the single biggest shake-up of the previously antiquated pensions system in the UK, been a success? On balance, yes. But we now have an even bigger challenge - and that is ensuring that investors fully understand that the benefits that A-Day brought are theirs for the taking.
RICHARD MULLEN is business development consultant at DC Link.
Simplification had two aims: Reduce the bureaucracy of tax regulation, and increase general understanding of pensions to encourage people to save more for a comfortable, and less State funded, retirement.
The result? A 1,500-page manual on applying the rules, with supplementary legislation and amendments. Then for most people the changes are minimal and mainly invisible. The winners are those who get advice on manipulating the new rules. No win for bureaucracy or saving then.
Simplification lost the plot as "exceptions" were considered. For example, the LTA could be seen as pointless given the numbers affected. But to then provide protection for the accrued benefits of high earners is just an attempt to mitigate a fallacious premise. You cannot simplify pensions by adding complexity.
Can pensions ever truly be simplified? Only if there is focus in doing so and successive governments resist the urge to tinker with the system.
DAVID PHILIPS is pensions director at BDO Stoy Hayward Investment Management
A common phrase or modern idiom is 'What does success look like?' and we cannot feel sure that the powers that be had any ideas of what success looked like when they penned the much heralded 'Simplification' of pensions, which became legislation in April 2006.
I feel that the legislation has been good in parts.
Good in that we have a clearer basis on which to build and understand pensions saving in the future. Gone are the many different pension regimes and complications that we built up over many years - that is of course unless you are in the transition between the 'old rules' and the 'new'.
Good are the clearer limits on annual funding and lifetime limits, which benefit the well-off most who can better manipulate the system to make substantial funding to pensions over shorter periods of employment.
Good was the concept of raising the profile of pensions and making them 'interesting' again, but alas the public's view changed with the U-turns on allowing residential property investments and the viable cascading of pensions wealth post-75.
'Successful then?' - I think that the answer is elusive since we cannot assess whether there was any clear vision about 'what success looked like?'
DAVID SEATON is director at Rowanmoor Pensions
The principal concept of pensions simplification was to simplify a complex set of rules. For the greater British public this has been achieved. Everyone can contribute to any pension scheme. The annual allowance is set relatively high and the lifetime allowance is in line with the pensions cap. It is far easier to put money into a pension scheme when cash is available and receive appropriate tax relief.
We will see a significant increase in the money saved in pensions. The Government has said it expects an increase in pension tax-relief of £250m a year by 2010 as a result of simplification. I suspect this will probably not be for the lower paid, which perhaps indicates a failure of the process!
The proposals for unrestricted investment opportunities and alternatively secured pensions were inspirational and raised the profile of pensions. Their subsequent withdrawal was very damaging.
The legislation is anything but simple; this was a complete failure and will increase costs unnecessarily.
We have seen little evidence of the "light touch" reporting and compliance regime. We have yet to see the impact of the Pension Scheme Return.
RACHEL VAHEY is head of pensions development at AEGON Scottish Equitable
Whether I think A-Day was a success depends on what I am measuring it against.
If I am measuring it against the volume of new business and opportunities the answer is yes. A glance at the new business figures for the larger providers for 2006 shows that A-Day was good news for the industry. But if I am measuring A-Day against its original aims to devise "simple, durable, and easily understood rules", then it has been less successful. Despite these worthy principles, we are left with another set of convoluted tax rules needing almost 1,000 pages of technical explanation in the Registered Pensions Schemes Manual. And the u-turns on residential property, pensions term assurance and alternatively secured pension have knocked people's confidence, as well as removing some much-needed simplicity at the cost of minimal tax savings.
Overall, I think A-Day was a success. But it was also a missed opportunity.
JAMES WALKER is technical manager group protection at Legal & General
While, it is fair to say that interpreting how the legislation affects group risk has required a lot of effort, there are now many opportunities to be taken advantage of.
Previously, lump sum payments on death were restricted to four times the permitted maximum. Now, trustees can remove this restriction from their scheme rules and provide a tax-free lump sum on death of up to the lifetime allowance. Some trustees have considered converting their insured dependants' pensions, which are taxable on the beneficiary of the claim, to lump sums.
Previously, there needed to be a "degree of association" for different employers to be included in a registered death in service scheme. The rules around this have been relaxed and now schemes are open to employees of the employer, and also employees of any other employer. In practice, this means that membership is actually open to anyone. Now, as long as an employer has set up a scheme for his employees, there are opportunities to include overseas employees, ex-employees or even equity partners who may have been excluded from the previous regime.
Research has shown us that many advisers and employers see the Disability Discrimination Act as a barrier to the provision of Group Income Protection mainly because an incapacitated employee will lose valuable benefits if their employment is terminated. With the changes as outlined above post A-Day Legal & General has now been able to introduce real innovation into the GIP market with the facility to also continue to provide life cover, where we insure the life policy and to continue to pay the insured pension contributions where the ex-employee continues to be a member of the retirement benefits arrangement.
JANETTE WEIR is director at IQ Research
Despite the Chancellor's best efforts, A-Day has reinvigorated consumers' interest in pensions and resulted in a steady income stream for IFAs who have jumped at the opportunity to consolidate their clients' portfolio of pension assets.
Providers have seen SIPP sales rocket as IFAs have moved a wall of pension money from old style products such as stakeholder, occupational money purchase schemes and personal pensions. On the face of it, providers must be congratulating themselves on record new business levels, but is there trouble ahead? The clue to the problem lies in the name self invested personal pension - for SIPPs to be of value to the client some need for self investment, over and above that offered by a stakeholder or a PP, is required. If the SIPP has been sold by an IFA who is not an investment expert to a consumer who is also not investment savvy, where is this need for the extra investment choice coming from, and who will give the specialist investment advice?
JOHN GLEADALL is senior technical manager at Legal & General
In many ways - "Yes". By enshrining the new regime in law and doing away with most of the discretion that previously existed, HM Revenue & Customs has been able to target substantial reductions in the numbers of staff employed on pensions matters. This will lead to some saving of taxpayers' money.
For individuals already convinced of the need to save for retirement, A-Day has made life much simpler. Arbitrary age related contribution limits have disappeared with individuals now able to obtain tax relief on personal contributions of up to 100% of their tax year earnings. Formerly non-pensionable items such as taxable gains on share options can now be included.
The new annual allowance permits total contributions from employer and employee of £225,000 in a year with no adverse tax consequences (tax relief on personal contributions is still limited to 100% of earnings). If you're over 50 and take all your benefits in the same tax year then even the annual allowance does not apply to you. "Taking your benefits" does not necessarily mean taking taxable income. You can designate your fund for income drawdown ("unsecured pension" in new money), take your tax-free cash and then draw the minimum income, which happens to be zero.
All in all, a boon for those in a position to make large pension contributions and a huge boost to the SIPP market.
CONCLUSION: The main point coming from the responses is what can we define as success? Is it getting more people interested in saving or actually simplifying the regime. The responses are varied. Business has certainly increased since A-Day and there is more flexibility and choice for the consumer. However, the late issuance of guidance from HMRC left the industry second guessing what it needed to do and the well-known u-turns on residential property and ASPs did dampen some of the enthusiasm that people were beginning to show towards their pensions. The A-Day process certainly did bring pensions to greater prominence and helped foster stronger relationships between the industry, DWP, the Regulator and HMRC but only time will tell if it has been a long term success.
‘Most significant’ upgrade since launch
Changes happening over coming months
Had accepted British Steel business
Aimed at HNW clients and family groups
Set for 1 April 2019