After years of major programmes including RDR, automatic enrolment and pension freedoms, wealth platforms and insurers could be forgiven for complaining of “regulatory change fatigue”. But aside from the disruption to business as usual, mandatory updates have an additional cost; the lost opportunity to direct budgets toward positive propositional change and differentiate a business from its peers.
This year has been different. Phillip Hammond has left pensions relatively untouched. A reduction to the Money Purchase Annual Allowance (MPAA) has not yet made it into law, and this is causing some uncertainty for advisers in the absence of any guidance on when (or whether) this will still be implemented after the general election. A new political mandate could open the door to other direct tax hikes with greater revenue-raising potential.
Meanwhile the Lifetime ISA from 2016’s Budget has been launched with little fanfare, but only three firms launched on the 6th April 2017 and all were stocks and shares variants. Given the very different time horizons and capacity for loss of an under-40 saving for their first home, compared with the 20-year minimum for the same saver targeting retirement, the absence of a cash LISA so far looks like a yawning gap.
Its stocks and shares cousin fits the profile of a pension, but without the employer contribution.
So what next for retirement savings? With a hiatus in new government policy, proposition teams must finally be getting excited about getting a decent share of that development budget to spend on their backlog of ideas. Will that translate to an entirely new pension product, or could the next year see a breakthrough in customer engagement to reverse UK plc’s growing savings gap?