Jason Whyte, Director in EY’s Insurance practice, comments: “To borrow Charles Dickens’ famous phrase, 2016 could be ‘the best of times, the worst of times’ for UK pensions players. 2015 has seen the biggest changes to UK life & pensions in a generation with the implementation of the new Pensions Freedoms, but 2016 is set to be even more revolutionary.”
|
• 2015 has seen the biggest changes in a generation, but 2016 is set to be even more revolutionary
• The industry can expect major changes in the tax status of pensions – anticipated to be announced in the 2016 Budget
• And must grapple with the fall-out of a number of other changes hitting the sector
The industry can expect major changes in the tax status of pensions – anticipated to be announced in the 2016 Budget
“On a regulatory front, in 2016 we can expect to see the implementation of the “Regulatory Sandbox” by the FCA, and responses to the consultations on the Financial Advice Market Review (FAMR) and the Pensions Green Paper. FAMR is looking to find a way to offer quality financial advice to a mass market that may not think it needs it – while protecting the hard-won successes of the Retail Distribution Review (RDR) at the wealthier end of the market. It won’t be easy, but an answer that gives customers and the industry an acceptable mix of cost and risk could be the catalyst for engaging the next generation of customers.
“It now seems less likely that the Pensions Green Paper response will recommend a shift to “Pension ISAs” with contributions made post-tax, but we can expect major changes in the tax status of pensions – perhaps to the flat rate tax relief proposal.”
The industry continues to grapple with the aftermath of a number of other changes
“Meanwhile, the industry will be grappling with aftermath several other changes. Auto-enrolment is extending to the smallest employers, who may not be ready for the change it brings, and the industry and the National Employment Savings Trust (NEST), will have to deal with any fallout. This coming April will be the first tax yearend for customers who have used the Pensions Freedoms, and it isn’t yet clear how people who may only have experienced PAYE will cope with this – though the way that tax is calculated on flexi-access drawdown means that refunds are more likely than additional demands.
“The best of times, the worst of times? Only time will tell.”
|
