As out of offices were being turned on across the country, a sigh of relief could be heard throughout the pensions industry as the door closed on a busy 2015.
So what have been the major changes?
It is probably fair to say that the biggest ‘jolt’ of the year came in the form of the new pension freedoms. Individuals with defined contribution benefits were no longer forced into purchasing an annuity – they now have the responsibility and freedom to spend their money as they wish.
There is no denying we all knew the changes were coming – but how many of us were actually ready? Billions of pounds have been withdrawn from defined contribution accounts through Uncrystallised Funds Pension Lump Sums (UFPLS) or via drawdown products since 6 April 2015, however, is it possibly still too early to tell whether the money has run dry…?
Pension Wise (or not so wise)
As a consequence of the new pension freedoms, Pension Wise was set up by the Government to provide guidance to those individuals who had accrued defined contribution benefits and were interested in making use of the new flexibilities – namely to ensure they had information on all the options available and the consequences of these options.
So has it worked? The general consensus is…not really.
The majority of individuals who have sought help from Pension Wise needed advice, not guidance, and a large portion of these individuals will not have the financial ability to pay for it. Unfortunately, it seems Pension Wise is all a little bit too little a little too late. Maybe it is time for a revamp in 2016…?
It was not Labour’s day, or year to be frank, with the Conservatives winning the General Election in the first half of 2015. Steve Webb, the former Pensions Minister was out, and in came Ros Altmann. Ros has previously been an avid supporter of extending the pensions freedoms to individuals that are already in receipt of an annuity…could 2016 be Ros’s year to see this through?
Aren’t we all equal?
One of the most debated cases around this year was the case of John Walker v Innospec. Although Mr Walker can appeal the decision, the Court of Appeal has stated that pension schemes are not required to provide civil partners or same-sex spouse’s benefits equal to those of a heterosexual couple, for benefits accrued pre 5 December 2005.
Whilst this is a massively disappointing outcome for thousands of individuals like Mr Walker who want financial security for their surviving same-sex spouse/civil partner, if Mr Walker was successful, the estimated cost to schemes of equalisation has been estimated by the Government to be around £3.3billion.
2016…all quiet on the western front?
There’s no denying 2015 has been an incredibly busy year for the pensions industry. Will 2016 bring any respite?
With the introduction of the new single-tier State Pension, the abolition of contracting-out for defined benefit schemes, the new SORP requirements, reductions in the Annual Allowance and Lifetime Allowance and changes to Pension Input Periods, the potential for a new DC Code of Practice. The list goes on…I hope that you had all the rest you could over the Christmas break…2016 looks set to be anything but easy going!