A few weeks ago , I wrote to the people organising the agenda for the PLSA’s annual conference in October, suggesting they include a session on how we as pension people can help those suffering from the cost of living , just get by.
I thought it might result in a fringe event, maybe a panel session late in the afternoon. I did not expect the PLSA to place a session right at the start of the first day , hosted by Fiona Bruce to discuss just this.
And I certainly did not dream of being invited to be a part of it.
But so it’s happened – here’s the invitation
We would like to invite you to join us and speak at our upcoming PLSA Annual Conference in Liverpool, 12-13 October….
We are hosting a question time style panel, which is being Chaired by Fiona Bruce, that will consider the key issues facing pensions. The discussion will explore topics such as pensions adequacy, public understanding of the savings landscape, the role of pensions in UK growth and supporting a greener economy, all against the backdrop of the current cost of living crisis.
The event will take place between 09:30 –10:30 on 12 October.
It took me 0.00001 seconds to say “yes”!
I am so pleased by this, it is such a great opportunity to share the thoughts I have , which are really the thoughts you have re-packaged for this blog. It’s absolutely brilliant that we will be able to discuss the big issues as they impact people over the next 18-24 months.
By October we will have a new Prime Minister , a new ministerial team and we will know what measures will be in place to combat the huge mortgage, rent , food and most of all fuel bills that hit our bank accounts month after month.
We will be bag in the middle of the “challenge of winning pension some attention” set by the PLSA and ABI to its members.
And by then , millions of savers will be asking whether it is their pension contribution or their household bills that should be paid first while millions more over the age of 55 will be wondering if it is worth breaking open the wrapper and consuming some of the pension sweeties they’ve saved for later age.
Meanwhile there are absurd and noxious issues emerging from the broken system of taxation and some unforeseen consequences of auto-enrolment legislation.
1. Impact of Annual Allowance on healthcare , the NHS and senior medics.
While we have seen excess deaths throughout this summer, the NHS is being starved of the efforts of senior GPs and consultants who are finding that discretionary work and even contractual work , is losing them more in pension rights than it is gaining them in take home pay.
2. Impact of the “net pay anomaly” on the lowest paid
We are seeing up to 1.7m low earning savers paying 25% more into their pensions under “net-pay” than those low earners in relief at source pensions. Not only is this happening today but it has happened for the last 8 years and there will be no redress till 2025 and then only on the impact on 2024. The people impacted by the net-pay “anomaly” are the people who are most susceptible to the cost of living crisis.
3. Impact of “opt-out ” incentivisation regulations on pensions and reward strategies
Finally we are seeing an unforeseen consequence of the auto-enrolment legislation that means that employers who have identified those in greatest need of financial help are in peril offering staff non-contributory pensions for fear of incentivising “opt-outs”.
There are immediate things that can be done to mitigate the negative impact of the Annual Allowance, the Net Pay Anomaly and Opt-Out regulations.
Tony Goldstone is heading the campaign to get exemptions for those caught in the noose of the pension taxation in the NHS.
Useful tools & pension/tax 🧵👇
🆓McCloud🛠️(most NHS staff)
🆓AA🛠️(GP) 22/23 #CPIdisconnect
Pls RT https://t.co/74Hn1GO8nV
— Dr Tony Goldstone 💙 (@goldstone_tony) August 18, 2022
Boris Johnson said he would sort this, he didn’t. Liz Truss says she will sort this – will she?
Ros Altmann and the Net Pay Action Group are campaigning not just to get a long-term fix to the net pay anomaly but to bring forward redress for those over-paying their pensions today. Real Time Information means that HMRC can see who is overpaying their pension contributions and they could, if emergency powers were given them, deliver redress for 2022 -23 over- payments in time for those hardest hit by the cost of living, to avert some of their hardship.
I will be using next week’s “national payroll week” to raise awareness of the need for employer to be given the freedom to help those who are and will be opting out of workplace pensions to remain active members in AE authorised schemes till re-enrolment. This will almost certainly require some initiative from the DWP to ensure that the anti-opt out incentivisation regulations are managed with sensitivity. More on this in today’s other blog.
There is much more to say. Pensions must continue to help grow the UK and global economy by investing in it. It can do better, directing our savings into areas which maximise productivity gains and ensure that social projects are properly funded through allocations to infrastructure. Pensions can be used to invest in speeding up our move away from fossil fuels and reliance on gas from unfriendly nations. We can use our money to reduce the emissions clogging our atmosphere and creating climate change.
All of this must continue through the current crisis, the longer term challenges of building Britain back better after the shocks of Brexit and the pandemic do not go away because of the short term issues people are facing from household bills.
But most importantly, and this is what I see this session at the PLSA as doing, we need to get back to the central purpose of pensions, which is to improve the lives of those who can no longer work for growing old. We must find new ways to solve old problems, whether that be through a revival of the annuity market, CDC or a development of investment pathways. The PLSA has charge of ensuring that 10.5 million new savers as well as twice as many again existing occupational scheme members have retirement living standards befitting their labour.
Thank you PLSA. May some more potential delegates read your program of sessions and choose to come to what is now a more relevant, interesting and entertaining conference for the inclusion of this session. Thank you personally for including me.
Without meaning to detract from the wider message in this post, I’m going to make a picky point about the NHS pension issues. You said the affected staff “are finding that discretionary work and even contractual work , is losing them more in pension rights than it is gaining them in take home pay.” In fact the problem is almost the opposite to that: increased work or pay is gaining them increases in pension rights, which attract penal tax charges which reduce take home pay (in some cases the tax charges are more than their pay). It’s an important point. One of the reasons pension rights for many employees can be eroded without adverse consequences is that it’s a future benefit, and people concentrate more on the impact of employer decisions on their pay today. (Not implying that the NHS staff are acting unreasonably- I would not be happy with paying large amounts of tax today to get a potential benefit in the future either, given that todays take home pay is needed to pay today’s living costs- but I think many would accept a trade off of lower pension rights for higher take home pay)