Survey findings from the latest NextWealth: Managing Lifetime Wealth report, sponsored by Aegon, reveals a strong desire for future Government reform among financial advisers when it comes to their retirement client base.
The survey, which was conducted in anticipation of the upcoming General Election, sought to understand advisers’ key priorities for the next Government.
While the overarching sentiment from participants is a desire for reform, their priorities fell into the following key areas:
Tax burden reduction: The most popular request, from 25% of advisers, was a desire for reforms that would lessen the tax burden on consumers saving for retirement.
Consistency and certainty: 17% of advisers want Government to establish a more consistent approach to implementing and overseeing pension rules, including death benefits and the Lifetime Allowance.
Simplification: 12% of respondents highlighted the need for simpler rules surrounding retirement, investment and taxation.
Steven Cameron, Pensions Director at Aegon said: “It’s clear from our findings that to support their retirement clients, financial advisers want a future Government to reduce the tax burden for consumers. The recently announced Budget cuts in NI by the current Government will have been welcomed, but the question is what further reductions in tax might be delivered in future. While cutting NI rather than Income Tax preserves the generosity of pensions tax relief, it does not help those over state pension age who don’t pay NI.
“Advisers are also very mindful of the complexities of the current system. More simplification could help advisers explain current tax, pension and investment rules to their clients, while more consistency would improve their ability to advise on longer term financial planning. The future of the pensions Lifetime Allowance will be front of mind with the Labour Party stating it would reintroduce this in some form if in Government.
“In light of the importance of longer-term planning for retirement, we urge all political parties to set out future policy proposals in their upcoming election manifestos. It’s vital that politicians avoid constant change or unnecessary disruption when it comes to planning for retirement. Financial advisers across the country want to help their clients to ‘do the right thing’ and make well-informed decisions about securing their financial future. Complexity and constant change – be it constant tinkering or radical overhauls - makes this far more difficult to achieve.”
In support of these findings, advisers shared their perspectives:
On the tax burden reduction:
“Increase in personal allowance. A tax-free limit for pensions to be passed on post 75…”
“Make pensions tax free to a solid level so that they [people] are able to choose to fund care…Concentrate on making things better for normal [people].”
On consistency and certainty:
“Consistency and no big changes.”
“Not changing ages for accessing pensions.”
On simplification:
“Clear information around allowances and protections.”
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