The UK’s Lifetime Allowance abolition is considered a blot on the pensions landscape by pension experts with the majority of Association of Member-Directed Pension Schemes annual conference attendees believing that the pension changes in the past 12 months have been unacceptable in their implementation.
Andrew Phipps, chair of AMPS used his Chair’s address at the industry body’s annual conference held yesterday in London, to highlight the issues that have been caused by the poor implementation of the legislation to abolish the LTA.
The event attended by over 110 SIPP and SSAS experts, representing the majority of the sector, heard that the LTA abolition has felt the most chaotic, and disorganised change of the last two decades which has included A-Day in 2006, Freedom and Choice in 2015, Consumer Duty in 2023 and dozens of other changes.
Phipps said: “There have been, and still are, lots of unanswered questions. We’ve seen last-minute clarifications, corrections, and finally last-minute guidance from HMRC confirming that some customers should delay taking benefits or exercising their statutory rights to transfer their pension, because of the poor legislation that has been rolled out. And this has all come about because the industry was not listened to.”
When surveyed during the event, attendees said that if you were appraising how changes impacting pensions have been rolled out over the last 12 months, they considered it unacceptable.
He added: “AMPS, along with TISA, the ABI, the Society of Pension Professionals and other industry bodies and providers, provided ample feedback to the Government, especially on the tight timescales involved, so there really is no excuse.”
There were four other areas that dominated the conference in terms of recent changes that haven’t gone as well as they could have done:
1. Consumer Duty: as a principle based change my sense is it has been implemented very differently between regulated firms and we probably need more guidance from the regulator to tighten this up, particularly around sharing information along distribution chains. My sense is there is a way to go on this.
2. Statutory money purchase illustrations: the changes to SMPIs last year caused confusion around why they were even being made as well as actually how to roll out volatility groups.
3. General Levy consultation: the DWP’s general levy consultation did turn out well in the end, but it was unnecessary and the DWP should not have backed what was clearly an unfair approach to meet their funding shortfall.
4. Pension scheme returns: the changes being made to the Pension Scheme Return, where significantly more data is needed but the functionality to submit a return by uploading a file has been removed.
He concluded: “It is not unexpected that the experts attending our annual conference feel that the pension changes made in the past year have been unacceptable in their implementation. It has been an intense and challenging 12 months for providers. We need to find a way so that when change happens, it happens smoothly, with greater consistency, realistic timescales and without the need to constantly make amendments to plug gaps.”
