With Sipps sales continuing their upward trajectory, Money Marketing talks to Barnett Waddingham self-invested pensions technical specialist James Jones-Tinsley about making pensions tax simple and the role of advice ahead of the Money Marketing Interactive conference.
What do you think is behind the increasing complexity of pensions taxation?
Continuous tinkering of the pension rules by successive governments, with the primary aim of increasing their short-term tax take.
How do you see the Sipp market evolving in the next five years?
Ongoing consolidation of traditional Sipp operators with distressed books of business, coupled with an overall maintenance in the number of Sipps, as platforms and investment managers decide to offer their own Sipps, and a focus by all Sipp providers on automation with increasingly-limited investment options and online income drawdown.
What are the most frequent questions you get from advisers about pensions taxation?
Typically, these range from help with the tapered annual allowance and its interaction with carry forward, the different lifetime allowance ‘tests’ at age 75, and the application of the taxation of death benefits rules to real-life situations, particularly where ‘unusual’ requests have been made within an Expression of Wishes Form.
What role should practical case studies play in solving pensions problems?
Case studies are a great way of bringing abstract rules and concepts to life. They need to be realistic, but at the same time not over-do it, as they can then become too complex.
What’s the easiest way pensions can be simplified?
Scrap the lifetime allowance, tapered annual allowance and money purchase annual allowance. Have one annual allowance amount for everyone (for example, £20,000 to align it with Isas) at a percentage that incentivises basic rate taxpayers to save more into a pension. Scrap all pension acronyms, and pass legislation that generally puts changes out of the government’s reach, requiring either a significant majority, or (preferably) significant cross-party support to overcome the barrier.
Are providers offering enough technical support to advisers with post-retirement clients?
Yes, I believe so. Like other providers, every year we conduct numerous seminars and workshops around the country and produce a significant body of briefing notes, case studies and blogs on a wide range of pension matters, whilst highlighting the importance of obtaining financial advice wherever possible.
What one key tip would you give advisers looking to maximise pensions tax efficiency for their clients?
Where appropriate, utilise the unique features of bespoke, trust-based Sipps and SSASs to provide a tax-efficient pension solution for the different types of clients that you advise.