There are always interesting discussions to be heard in the year before a general election – kites are flown to test the views of the electorate, and 2014 has had its fair share. Should we merge pensions and Isas? Will the tax-free lump sum be abolished? Perhaps most importantly, what is the future for pensions tax relief? There have been a number of suggestions, including moving to a flat rate of pension tax relief, further manipulation of the lifetime allowance or some sort of matching system. Watch this space.
The Sipp market has had more than enough issues this year, such as the new rules on capital adequacy, continued thematic reviews and ongoing problems with unregulated investments. This has led to consolidation and to the selling of Sipp books. With a possible judicial review on the cards and financial ombudsman service decisions now emerging, this looks likely to continue.
The move to DIY investing has continued post-RDR, and direct-to-consumer has been on the agenda for most pension providers. Add this to the new pension freedom regime, and you have the FCA promising to look at non-advised income drawdown.
My final cuckoos in the nest for 2014 are the discussions around collective defined contribution pension schemes. They seem to be something of a Marmite option – you either love them or hate them. The discussions continue, but so far I have seen little demand for them.
What will 2015 bring? A general election with promises of tax changes, more studies on behavioural stuff and, in the light of pension freedoms, a real focus on investment for retirement.
Mike Morrison is head of platform technical of AJ Bell
