Some 25 per cent of advisers want reforms that would lessen the tax burden on consumers saving for retirement, research has revealed.
The latest NextWealth report sponsored by Aegon found advisers have a strong desire for future government reform.
Tax burden reduction was the most popular request followed by 17 per cent of advisers wanting the government to establish a more consistent approach to implementing and overseeing pension rules, including death benefits and the LTA.
Within the report advisers shared their perspective on the tax burden reduction with one adviser suggesting: “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].”
While another suggested increasing the personal allowance and a tax-free limit for pensions to be passed on post age 75.
Steven Cameron, pensions director at Aegon, said: “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.”
Some 12 per cent of advisers also highlighted the need for simpler rules surrounding retirement and taxation.
One adviser asked for clearer information surrounding allowances and protections.
“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,” said Cameron.
This comes after Labour said it would launch a review into pensions and retirement savings if elected.
As part of its plan for financial services, the party said it will look into whether the current pensions framework delivers sustainable retirement outcomes for individuals.
The review will look across the pensions world and will consider all types of pensions and retirement savings plans such as defined benefit, defined contribution, and public sector schemes including LGPS.
alina.khan@ft.com
