The Weekly Wrap: February 27 edition
A round-up of this week's pensions stories from across the FT group, from a Tory MP joining calls for flat-rate tax relief on pensions, to funds' shortening patience with their asset managers.
Pressure on government for new independent pensions commission
FT: A report from International Longevity Centre UK has called for the establishment of an independent pensions commission. The think-tank’s report says the commission is necessary to handle the challenge of millions of people retiring with insufficient income. The report recommended the commission should be set up as soon as possible after the general election.
The week in numbers
12 months Average time given to UK managers to turn around poor performance
1m Number of savers able to cash in through trivial commutation
30-33 per cent Level of flat-rate pensions tax relief called for by Mark Hoban
Pension funds giving managers less time to perform
FTfm: UK pension funds are giving underperforming managers less time to improve than before the financial crisis. Figures released by consultancy firm Spence Johnson show that on average underperforming asset managers are given eight months less time to improve than in 2008. The trend has also been identified by similar research in Japan.
UK unprepared for pension reforms
FT: The pensions industry has criticised the government for failing to prepare for this year’s reforms. The Association of British Insurers has said six key policy areas need more clarity, including tax rules and information regarding the Pension Wise service. The government was also criticised in parliament this week for a lack of clarity as to how the reforms would affect means-tested benefit claimants.
Up to 1m set to cash in pension
FT Adviser: Xafinity has said that this year’s reforms have enabled up to 1m members of occupational schemes to exchange their future pension for a cash sum through trivial commutation. The changes have increased the thresholds at which members can make this exchange, as well as a reduction to the age from which trivial commutation is permitted.
Senior Tory calls for scrapping of higher-rate pension tax relief
FT: Former financial secretary to the Treasury Mark Hoban has urged the government to replace pension tax relief for high earners with a flat rate of 30-33 per cent. The Conservative MP for Fareham, who has also served as minister of state for work and pensions, said the change would benefit lower earners. Hoban is stepping down after the general election in May.
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This week's social media comment
Bernard Yardley replies to Pensions Expert editor Ian Smith's tweet on policymakers turning their eye to pensions tax relief:
@iankmsmith question is, when the lifetime allowance is cut yet again (shudders) what will the next protection be called? Bring back FA89...
— Bernard Yardley (@BoggieTheBog) February 25, 2015But FT Money journalist Josephine Cumbo tweeted that Tory MP Mark Hoban's comments were not shared in the higher levels of the party:
For moment higher rate pensions tax relief looks secure in Tory hands, as Cons say they don't support ex Tory minister's call for flat rate.
— Josephine Cumbo (@JosephineCumbo) February 25, 2015