In advance of his speech this morning, Torsten Bell- our Pensions Minister – has told the FT of coming changes.
Torsten Bell’s promising bigger pensions for the self employed but with a stern warning for the pensions industry to improve its reputation for delivery.
You can read the article on this free link. If it runs out , contact me on henry@agewage.com
Thanks to Calum Kapoor for this scoop.
This is unlike the prognosis for the work of the Pensions Commission that the recommendations would come too late for this Government.
We can now expect action on the Pension Commission in the spring. This is bold talk from a Pension Minister clearly confident of support.
This is equivalent to a 50% + increase in what many working people see as a pension tax appearing on their payslip. Torsten Bell’s job is to make sure people want to increase their pension contributions. I am far from sure that throwing problem at the problem will be part of a cost saving of living budget introduced by a new Prime Minister and Chancellor of the Exchequer.
From what I read in the FT , the self-employed are the focus. We may get more on this later this morning (October 15th)
There is much to look forward to next year but as Bell said to the FT
“the problem facing the pension system is that people don’t trust it to deliver for them”.
The self-employed commonly have very lumpy income streams plus periods of feast and famine. Their lack of income security means that tying money up in pensions is a much less appealing prospect for them than it is for people in regular employment with more stable incomes. It’s rational therefore for them to be less keen on making pension contributions and to instead use other long term savings vehicles which offer more flexibility and earlier access to fund if required, such as ISAs – whether investment or cash – and property where ‘liquidity’ could be provided via mortgages.
It’s ridiculous that the importance of alternative long term savings vehicles, ISAs in particular, for swathes of self employed workers is not better appreciated.
Perhaps it’d help if all the bodies currently with ‘Pension’ in their title had that replaced by ‘Retirement Savings’ to remind them of the need for the full financial picture to be taken into account…
If an IFA were to map out a client’s retirement plan and cash flow model while only considering pension assets and income streams they’d rightly be branded incompetent and negligent, yet all these UK bodies appear structured to take just such a myopic view of retirement saving and planning, disconnected from the real world.