The complexity of the UK’s pension rules can risk client engagement as well as dampen their confidence, more broadly, in the pension and savings industry. A lack of confidence in pensions could lead to inadequate saving for retirement and failing to take advantage of the significant tax efficiencies that pensions offer.
These fears are supported by recent reports of, among others, NHS staff opting out of their pension scheme over concerns about the annual allowance and lifetime allowance tax charges.
Of course, not everyone is affected by these complexities. Indeed, some may consider the tapering of the annual allowance to be a nice problem to have.
However, there is a serious risk of contagion if investors lose confidence in the pensions system. So, perhaps it’s time to go back to basics.