The industry needs new ways of thinking around pensions tax reform, and thought-provoking proposals such as the recent IFS report are to be welcomed, says Rachael Griffin.
The tax and financial planning expert at Quilter says pensions taxation will likely be reformed at some point and hopes the government will lay out some direction of travel in its next fiscal event in March.
But she doubts reform is imminent. And while she warns against a piecemeal approach to tackling tax changes, she does point to some aspects of pensions tax that should be changed immediately, not least a reversal in the cuts to the money purchase annual allowance.
Griffin says: "Whenever we reach a fiscal event, or in the buildup to the fiscal event, pensions tax reform always raises its head. It's fair to say pension tax...is ripe for reform but what we can't have is piecemeal tweaks here and there. We can have some plugging of gaps for a period of time.
"We had the IFS report last week which suggested things like restricting of tax free cash...but there'll be certainly some political lobbying against that. But I think it's fair to say that we definitely welcome some fresh thinking around pensions tax reform."
Big changes to pensions taxation, such as turning the system on its head and creating Isa-style pensions cannot be done over night, she says.
"I think we will see it, whether that's going to be in March, I doubt it, but we might see a direction of travel. We really need to think of kind of new ways of tackling this and I think the IFS has really put out some interesting, thought-provoking solutions.
"I don't think it's necessarily all the answers but it's definitely thought provoking."
To hear more about the biggest tax issues advisers are facing, and what the next fiscal event might have in store, click on the image above.
carmen.reichman@ft.com
