The Big Question

With the election now set for May 6 what kind of retirement planning pledges would you like to see in the different parties’ manifestos?

Bob Bullivant is chief executive of Annuity Direct
In 1997 the UK had one of the best private pension systems in Europe. We now have one of the worst. My question for the parties is what action will you take to restore the UK pension system to its 1997 state?

Peter Carter is head of product marketing at MetLife
Retirement planning is crucial for the long-term health of the UK economy as a whole and for individual voters so it ought to be a major issue for all the political parties. They ought to be offering guarantees to voters on three key issues with the focus on stability and simplicity.

There should be a general commitment to a stable, long-lasting pension system which offers meaningful retirement benefits to all.

There ought to be a commitment to simplicity. A-Day way back in April 2006 promised exactly that but it has been unwound bit by bit. The changes to higher rate pension tax relief introduced further complexity to a system which is already too complicated and hard to understand.

All political parties should address the issue of public sector pensions as a priority. The inequality between the public and private sectors in pension provision is a major issue which could impact the productive performance of the UK economy as a whole.

Andrew Gadd is head of research at The Lighthouse Group
I think that after 13 years of Labour government we know broadly where they stand in terms of pensions; while the Conservatives have said that they will look at how they can simplify the rules around pensions and that they will give people more control over their retirement income. Alternatively, the Liberal Democrats say they will immediately restore the link between pensions and earnings so pensioners’ living standards finally improve and they will scrap the default retirement age. What do I want? Basically I want pensions to be very simple whoever comes to power on 6th May.

Laura Goodman is director of corporate communications at Rockingham Retirement
Whether it’s a new party in power or the recycling of the ‘other boys in the band’. I would like to see the new government pledge to abolish the requirement to annuitise at the age of 75.

We spend our lives in the retirement income industry getting the best product and the best deal to suit our customers’ needs, so why when a retiree reaches the age of 75 should he or she be put in the position of potentially blowing their chances of continued control of their income, not just for themselves but also for their beneficiaries?

The ‘Age 75 rule’ came into being at a time when life expectancy was considerably shorter than it is now. A person approaching age 75 can now have at least another 20 years to live; that’s a long time to be drawing an income from the wrong product.

It’s clear that the ‘Age 75 rule’ should be scrapped. And while we’re thinking of what we’d like to see happen over the coming months, let’s not forget our old friend the open market option (OMO). We’d like to see it in its rightful place: as the natural default, by law.

Robert Graves is head of technical services at Rowanmoor Pensions
The key is to get a clear, coherent and above all stable, long-term pension regime so that individuals and employers can confidently make provision for retirement. Continued changes to pension legislation undermine the confidence required for people to commit to long-term pension saving. Other key changes:
-  Make the state pension the proper bedrock of retirement provision by making it a flat rate entitlement set at a subsistence level and not unduly penalise those that make additional provision.
-  Make pension funds heritable by allowing pension funds on death to be passed on to family members’ pension funds without penal tax consequences. This would mean that pensions could potentially be used for IHT planning but would be better than increasing the IHT threshold.
Relax rules around requiring a secured pension by age 75; this rule creates too many nonsensical anomalies.
-  Make pension saving relevant to today’s society by allowing conditional, earlier access to pension savings and allowing greater investment flexibility.

Nigel Hare Scott is managing director of Home & Capital Advisers
With those aged 55 and above now representing 44% of the electorate, the ‘grey hairs’ can no longer be ignored by politicians, particularly as they are more likely to vote than younger generations and moreover are increasingly willing to vote tactically. It can be expected therefore that each party’s manifesto will contain something potentially enticing to capture a larger share of their vote.

However, the planned measures will almost inevitably be restrictive and unambitious.

Attention will probably be given by each party to the methods of funding long term care. With Government understandably promoting ‘care in the home’ packages, equity release could be endorsed as a secure means of meeting the substantial costs which arise. As the home is currently excluded from financial assessments, the saving could be put towards increasing the state pension, which is woefully inadequate for providing a reasonable retirement lifestyle.

Chris Horlick is managing director – Care at Partnership
At long last the debate surrounding how long term care will be funded is being taken seriously. I would call on any future party of Government to do the following:

1) Retain their focus on long term care. I am concerned that this important policy area will be neglected as less controversial issues confront a new Government.
2) Help self funders (people with over £23,500 of assets and who have to pay for their own care) know where to get proper financial advice. Of the 130,000 people in England who enter residential care each year, 41% or 53,000 people are wholly self funding. Despite this only 7,000 of them receive proper financial advice about how to fund their care needs. The Government must help drive awareness among consumers how to contact IFAs who can provide appropriate financial advice.
3) Make it clear what can be afforded and when it will be able to deliver change. Any Government will take 8-10 years to conduct a proper examination of the funding options and delivery of a new and comprehensive system of care in England. People requiring care must start planning for financial support now, as many people entering residential care will be dead by the time any comprehensive system is delivered.

Jonathan Howard is head of corporate clients at Courtiers Investment Services
We already have a fair idea what Labour’s pension manifesto will look like, given that a number of changes are already in the pipeline. Almost without exception I’d like to see these abandoned or at least heavily modified.

The planned removal of higher rate tax relief for top earners should be scrapped in favour of a reduced annual allowance. NEST should be shelved, although auto-enrolment into stakeholders and GPPs should be permitted with a simple matched contribution structure on basic salary.

Proposed increases to the State Pension Age should be accelerated to ease pressure on what is clearly a system at breaking point.

The mandatory requirement to annuitise at 75 should be scrapped completely since it serves no useful purpose. If inter-generational transfers are still a concern then keep 75 as the last age at which assets (crystallised or not) can pass tax-free to the next generation.

I’d like to see a pledge that pension commencement lump sum rules will remain unchanged for the foreseeable future, and that due consideration will be given to more flexible pensions system along the lines of the KiwiSaver model.

The above is clearly a wish list – in reality I’d settle for no further tinkering.

Paul Jayson is a partner at Barnett Waddingham
The political parties need to set a framework for restoring confidence to the bruised and battered pension system. The system has suffered from the twin government policies of:
Not allowing schemes the flexibility to react to changing circumstances such as increased longevity and raiding scheme’s coffers to improve State finances.

We need policies that recognise the long-term nature of pension provision and the needs of future generations.

For example: Encourage employers to provide good pension arrangements rather than punishing them for doing so through complex compliance and other regulations.

Allow members flexibility to access savings when they need them, in a controlled manner, over the saving up period rather than having them locked away and unusable until the end of members’ working lives.

Possibly integrate pensions with other savings vehicles like ISAs.

Amend legislation to reflect demographic changes since many defined benefit schemes were set up.

Transfer responsibility for pension policy from the political arena to a Pension Commission with suitable long -term objectives.

Improve education of employees on pension issues so that they understand the risks involved in under provision of pensions and also of different retirement saving strategies.

Truly simplify the tax system so that it is easily understood.