Funding for Retirement Debate

Written by Karen Bryan

The ‘Funding for Retirement‘ debate takes place at the Hospital Club in central London on Wednesday 17 December 2014. The discussion will examine the pension options available to the UK public. With the forthcoming changes to pension legislation due to start in April 2015, there will be plenty to discuss. I wish that I lived closer to London so that I could attend the event.

funding-retirement-event

The debate is hosted by the former BBC financial journalist Declan Curry.

On the panel are:

  • Steve Webb – UK Pensions Minister
  • Neil Lovatt – Director of Scottish Friendly
  • Stephanie Condra – Pensions Specialist at AXA Investment Managers
  • Steve Bee – CEO and Founder of Jargonfree Benefits

The event is organised by My Financial Services (MyFS), who focus on facilitating independent roundtable and panel discussions on key finance issues. You can follow them @MyFS Events on Twitter.

With increasing numbers of employees being enrolled in defined contribution workplace personal pensions through the National Employment Savings Scheme (NEST), a cap of 0.75% on annual charges for qualifying default schemes and easier access to pension pots starting in April 2015, the spotlight is on the pensions industry to develop appropriate, easy to understand and value for money products.

In my opinion, it’ll be a challenge for the financial services industry to be ready with products which can offer the desired flexibility at a reasonable cost to allow customers to use their pension pots like bank accounts. I’m on the lookout for this type of product, as I’m researching starting a new pension. The plan would be to use to it top up my income until I start receiving my State Pension, in just over 10 years. More flexible access to my pension pot will be ideal for me, as my earnings from self employment vary from year to year.

Video of the MyFS Funding for Retirement Debate

I found the debate very interesting. Below are some points I’ve picked out.

  • Stephanie Condra asserted that the focus for retirees should be on providing an income in later life, versus what to do with a pension pot of say £50,000. If people are planning to use their pension pots to pay off debts or give money to their family. they’re not thinking about income during retirement.
  • Both Neil Lovatt and Steve Webb thought it was likely that there’d be a future merging of ISAs and pensions. That’s in line with my Cash ISA Pension Account proposal.
  • Steve Bee explained why getting income tax relief on pension contributions isn’t really so generous. He perceives it more as a deferral of paying tax until you take your pension income.
  • Neil Lovatt stressed that he’d like to see more protection for taxpayers facing multiple exposure. Initially, by tax relief on pension contributions, the fact that people are permitted to take a tax-free lump sum of 25% of the value of their pension pots, then spending their pension pot and expecting the taxpayer to top-up their income and/or foot their care bills .
  • Steve Webb predicts that whichever party wins the UK general election later this year, there will be some tinkering with tax relief on pensions, perhaps with the introduction of a flat rate of tax relief.
  • All the panelists agreed that an annuity should be perceived as an insurance product to protect against the risks of longevity. This was a compelling reason for my decision to purchase an annuity last year, despite the forthcoming pension freedoms.