Brexit darkroom will still leave pensions in the spotlight

Former pensions minister Sir Steve Webb took the political temperature for our DC Snapshot event - and warned that the Brexit roadblock in Parliament would not protect pensions from possible tax changes.

He told the audience that the sheer scale of legislation required for Brexit leaves little room or time for any other kind of laws to be passed - but he did explain how changes to laws can be made by bypassing Parliament.

"Pensions tax relief could be exposed to change again, as could the possibly reduced lifetime allowance –– and an increase in the tax taper."
Sir Steve Webb

Given our audience was a diverse mix of pensions professionals, trustees and contacts, I thought there was little new we would be told about the government impact on the sector. After all, many of us have spent our careers anticipating and responding to political ‘improvements’.

However, this was; Lord Webb outlined how regulators can enact new legislation without it being discussed by MPs and Lords. Given the unusual prominence the sovereignty of parliament has right now, his insight into the machinery of government was timely.

He suggested pensions tax relief could be exposed to change again, as could the possibly reduced lifetime allowance – and an increase in the tax taper. He referenced the reversal of the exit charge cap fee of three per cent for pensions as an example, with the regulator calling a consultation, leading to a change by the Financial Conduct Authority. Public sector pay had previously made savings for government but with rises in the near future, that door was now closed. Social care was also shut off as it had proved too controversial.

The other big target? Pensions.

He translated the “confidence and supply” agreement with the DUP. ‘Supply’ means voting with the government on tax, putting a new emphasis on its meaning in this context. Lord Webb, now with Royal London, added that “we will see tax changes affecting pensions” and was also concerned about the ability of auto-enrolment pensions to secure a happy retirement.

Lord Webb concluded that “the review of auto-enrolment doesn’t ask the biggest question: ‘why aren’t people saving enough?’ I’m passionate about working, but I’m not passionate about people working who don’t want to be there.

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