The abolition of the lifetime allowance has felt like the most chaotic and disorganised change of the past two decades, according to the Association of Member-Directed Pension Schemes.
At its annual conference yesterday (May 14), Amps chair Andrew Phipps, said A-day in 2006, pension freedoms in 2015 and consumer duty in 2023 did not feel as disorganised as the recent abolishment of the lifetime allowance.
Conference attendees, who comprised over 110 Sipp and Ssas, were surveyed at the event and asked how they would appraise pension changes rolled out in the past 12 months.
In return, they stated the changes were “unacceptable”.
The government announced the abolition of the LTA from April 6 in the 2023 Budget.
The legislation to deliver the abolition of the LTA was published in Finance Act 2024.
Phipps, said: “There have been, and still are, lots of unanswered questions.
“We’ve seen last-minute clarifications, corrections, and last-minute guidance from HMRC confirming that some customers should delay taking benefits or exercising their statutory rights to transfer their pension, because of the poor legislation that has been rolled out.
“This has all come about because the industry was not listened to."
“Amps, along with Tisa, the ABI, the Society of Pension Professionals and other industry bodies and providers, provided ample feedback to the government, especially on the tight timescales involved, so there really is no excuse,” Phipps added.
Amps detailed four other recent changes that had not gone as well as they could have done.
These areas included consumer duty, statutory money purchase illustrations, general levy consultation, and pension scheme returns.
The association detailed that, as a principle based change, consumer duty has been implemented very differently between regulated firms and the industry needs more guidance from the regulator to tighten this up.
Amps added changes to SMPIs caused “confusion” around why they were being made as well as actually how to roll out volatility groups.
The association also pointed out that, while the Department for Work and Pensions’ general levy consultation did turn out well in the end, it was “unnecessary” and DWP should not have backed what was “clearly” an unfair approach to meet their finding shortfall.
Lastly, it mentioned changes being made to the pension scheme return, where significantly more data is needed but the functionality to submit a return by uploading a file has been removed.
Phipps said: “It is not unexpected that the experts attending our annual conference feel that the pension changes made in the past year have been unacceptable in their implementation.
“It has been an intense and challenging 12 months for providers. We need to find a way so that when change happens, it happens smoothly, with greater consistency, realistic timescales and without the need to constantly make amendments to plug gaps.”
tom.dunstan@ft.com
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