Editorial: The chancellor has pulled another rabbit out of the red case. This time it’s a tame European breed: the ‘no change on pensions tax relief ahead of the referendum’ kind.
On Friday evening it was reported that the Treasury might refrain from alienating Tory grassroots by (it is assumed) reducing their pensions tax relief to a flat rate or introducing a pensions Isa.
This could make Conservative MPs less likely to rebel and express their anger by voting to leave the European Union, an issue that is dividing the party.
Whether the two – tax relief on pensions and Brexit – are tactically linked or not is debatable. Either way, many in the pensions industry doubt that tax relief change is off the table for good, while also pointing out there is more than one way to fill the Treasury coffers.
Salary sacrifice arrangements, for example, are tipped by many to be next on the list of tax breaks George Osborne has his tax-relief hunter’s eye on; we will know more in a few days’ time.
Illustration by Ben Jennings
In the meantime, the pensions industry is trying to get to grips with a host of other issues, and came together in Edinburgh this week for the Pensions and Lifetime Savings Association’s investment conference.
Topics ranging from the Financial Conduct Authority’s market study, to Brexit, to climate change were presented and debated during the three-day event, which concluded today with a speech by historian Simon Schama on the timely topic of power struggles – within political parties, between nations and across continents – and how to derive meaning from them.
Trustees, more than anyone, will be able to relate to this. Today’s trustees are witnessing, and might sometimes be part of, a political power struggle taking place over pensions.
It involves politicians, government departments and industry stakeholders, as well as interest groups representing different generations and parts of society. Whether a compromise can be found and peace, or at least a truce, can be negotiated is only partly down to the industry. It might therefore do well to prepare for more upheaval.
