Joanne Segars (pictured), Chief Executive, National Association of Pension Funds (NAPF), comments on Chancellor of the Exchequer George Osborne’s proposal to abolish the 55% tax charged on some inherited pension pots…
Today's announcement is an eye-catching addition that is a natural follow on to the freedom and choice initiative mapped out by the Chancellor in his March 2014 Budget. While it may encourage some people to save more into their pension, assured they will be able to pass on the lion’s share without tax, the reality is that this is likely to affect only people with larger pension pots.
What will affect millions of people is the Guidance Service which they will need to help them make good decisions when planning their retirement income. Beyond today's announcement the focus must be on making sure the Guidance Service is in place ahead of these changes coming into force next year. The proof of all these reforms will be in their implementation and how they affect savers and voters. With less than 140 working days until the service must be up and running, the clock is ticking.
The Government also needs to keep hold of its promises about the annuity market, which the majority of savers are likely to still depend on for some of their retirement income. They should accelerate the review of the annuity market to ensure it is working well and can provide savers with products that offer good value.
