This was another year of evolution rather than revolution in pensions. Between January and July we were dusting ourselves off seemingly post-pandemic, from August to November we were ‘getting back to normal’ and we spent December rewinding it all.
Legislative changes were minimal, despite the government’s increasing tax bill, and regulatory changes were also rather thin on the ground as the Financial Conduct Authority played Covid catch-up along with everyone else.
The regulator started off well in January with the release of its defined benefit advice assessment tool, which allows advisers to assess their advice in this area using the FCA’s parameters.
This is a very useful piece of guidance; the only problem is that the number of businesses able to offer this advice is getting smaller by the day as professional indemnity insurance restrictions continue to bite.
In February, the Professional Finance Society launched its vulnerability task force, showing that the industry can be proactive about consumer issues.
Vulnerability is a key theme for the regulator, and the problem has unfortunately worsened due to Covid-19 and the need for some people to access their pensions earlier than expected.
It is encouraging therefore to see an initiative that goes beyond regulatory compliance and focuses on the needs of our clients.
The only legislative change of note came in the March Budget, in the form of the freeze on the lifetime allowance.
Given the government’s need for cash, this was probably less of a hit than we expected, but it will of course result in an increasing number of people facing a penalty for having a good saving habit and/or strong investment growth.
Advice in this area is far from straightforward, and specialist help will be very valuable for those individuals who are affected.
In July the regulator repeated its concerns about ongoing advice, noting in its annual report on the retail intermediary market that 61 per cent of adviser revenue comes from ongoing rather than transactional charges.
Those of us who were around prior to the Retail Distribution Review may remember that this was this was seen as a desirable outcome, however now it is seen as a sign that clients may be paying for services they do not need.
Fortunately, many clients who experienced a first-hand demonstration of capacity for loss during 2020 have a new-found appreciation of the value that advisers deliver, by managing long-term expectations and avoiding knee-jerk decision making, particularly where income payments are concerned.
July also saw confirmation of the proposed changes to the minimum pension age, along with the usual convoluted proposals for transitional protection.
Much time was spent investigating scheme rules and considering transfers until the government put a stop to it by closing the 'window' in November.
There was a return to live conferences from September, and the opportunity to network and to learn from other advisers was welcomed by many. It was clear from this that that the profession has not stayed still during lockdown.
