Now, being a bit pedantic when it comes to this sort of issue, it has been a bit irksome to me that the focus has been on the last clause – there has been no need to buy an annuity for a number of years! The key bit of the announcement is the first bit – No caps. No drawdown limits!
Now that we’re past the tax year end, and once the Easter holidays are over, I am sure the thinking and development will start apace.
I am sure there will be research suggesting that the removal of limits will be bad and that annuity purchase was good. I am also sure that this will be countered by research suggesting that the removal of limits will be good, and that people do not need to be protected from themselves.
There will also be further consideration of behavioural psychology and whether people make rational decisions and, if not, why not?
Anyway, I am sure we will come back to some of the big questions later – back to being a pensions geek!
Once I had got my mind around the proposals l immediately had a bit of a checklist of subjects to look at which could cause issues and/or opportunities.
After doing some IFA sessions a couple of other issues came up.
To counter this I have also had some good discussions about the tax planning flexibility that this new regime could offer, and the responsibilities we as an industry need to take in terms of educating and informing.
I have long said that retirement planning is the big opportunity – now we have the chance!
Mike Morrison
Head of Platform Technical
AJ Bell