A look back at 2018
2018 has been a quiet year in the world of pensions - no seismic changes or hacking of allowances makes for welcome relief.
We started the year in the midst of the British Steel debacle and defined benefit transfers have remained high on the FCA’s agenda throughout the year. There are changes coming to the qualifications required to give advice, and an overriding principle to look at the whole picture, including the suitability of the investments to be made should the decision be to transfer. Common sense when you think about it. With more FCA reviews coming, expect more on DB transfers in 2019.
In practice we have seen a notable decline in DB transfers throughout the year. This is down in part to those who want to transfer having already done so, and there being fewer advisers in the market. Transfer values throughout the year have been relatively stable, so not a significant factor.
In June we had the long-awaited Retirement Outcomes Review (ROR). While mainly focused on non-advised clients, there are impacts that will be felt by all in the retirement space. We are expecting feedback and further consultation in January but the main focus is on improving engagement and promoting competition. Changes are coming to wake-up packs and illustrations, with the advent of single page summary documents. This also ties in with the FCA’s work on smarter communications. Anything that makes pensions easier for the famed “man (or woman)-in-the-street” to understand is to be welcomed. We wait with interest to find out if SIPPs will be included in the requirement to provide default investment pathways – a decision with big implications.
2018 has been a bit of a rollercoaster for the pensions dashboard delivery story. We had rumours of the whole thing being killed off by the Government, delays to the DWP feasibility study, and finally a consultation launch. The train is definitely back on track as we have confirmation that state pension data will (eventually) be included and pension schemes will, in time, be compelled by legislation to provide data. Although the plan is still to see some form of dashboard in 2019, only a very limited version will be feasible in this time frame. It is important that people are made aware of what’s included and what’s not, otherwise there is a danger of poor decisions made on incomplete information.
IHT has also been on the 2018 agenda. The Office for Tax Simplification (OTS) had a call for evidence on simplification across the board, which included a look at pensions. This is an area that could be greatly simplified, ideally by a carve-out in legislation to remove the need for discretion on pension death benefits. This would significantly shorten the administration process, lower costs, give members certainty and allow much faster payments to beneficiaries. This is a view we made in our response to the paper, and my colleagues met face-to-face with representatives of the OTS to highlight the issues. The ongoing saga of the Stavely case in relation to ill-health transfers, with conflicting decisions throughout the court process, also highlights the need for clarity. The OTS first report confirms that they are still looking at pensions and IHT and will report back in spring 2019.
Other themes have included ongoing work on pension scams, the platform market study and development of the single financial guidance body to name a few. A quiet year in pension terms, but still plenty to keep us all in a job.