The pensions industry may have hailed the £50,000 annual allowance as a victory, but the new rules are not without their problems, warns Gill Wadsworth
For the government to retain the industry’s positive support and to ensure that the new regime doesn’t undermine the good work already done by employers in offering workplace pensions, there needs to be a moratorium on further changes to the tax system.
Companies are already grappling with the onset of auto-enrolment alongside coping with new regulations as well as myriad other concerns brought about by a challenging economic environment.
Employers will probably feel trepidation when it comes to putting any kind of alternative benefits package in place if they feel the government cannot be trusted to leave them alone.
Indeed, the temptation to simply offer the bare minimum and leave individuals to manage their own affairs could become overwhelming in the absence of consistency and clarity over the future of employee benefits.
As Hommel says: “For employers to be motivated to put durable savings arrangements in place, they need confidence there will be no further fundamental changes to the tax and regulatory pensions framework.”