Gordon spins on his own finger again

[CliveV]

Just 8 months ago this Government re-instated Pension Term Assurance which it did away with several years ago when they ballsed up the introduction of Stakeholder Pensions.

After pressure from the industry, the consumers association, uncle Tom Cobbly and all they re-introduced it as part or their Pension Simplification regime that was indroduced in April this year.

Now it seems that Gordon is going to scrap it! see below:-

Does anyone still think this lot actually know what they are doing??????

BREAKING NEWS - "Cover" magazine 06 12 06

PTA MAY BE SCRAPPED

Pension term assurance (PTA) looks set to be scrapped from 1 April next year, the Pre-Budget Report has revealed.

According to the report, published Wednesday midday, the Government has decided to review the tax relief option on PTA with the view to possibly getting rid of the tax relief option on life insurance policies. The report revealed that any changes the Government decides to make will not affect any arrangements entered into before 6 December 2006.

The news has caused uproar in the industry.

Commenting on the news, Andy Milburn, IFA market manager at Royal Liver, said: "This doesn't give us enough to go on. Our understanding is that it puts PTA tax relief under review. Providers over the next few days will have to decide if they need to withdraw the product from immediate sale or choose to continue to allow customers to purchase it but with a caveat that tax relief could end next year. The Government isn't treating customers fairly. Providers without a switch option and providers with limited switch options now need to consider their positions with regards to customers who have bought PTA with them since 6 December 2006."

Jon Briggs, head of protection research at Hargreaves Lansdown, said: "This is yet another U-turn in legislation from a Government that doesn't seem to understand the unintended consequences of legislation that came into force only eight months ago today. This is so unhelpful in closing the £2.3trn protection gap and will simply mean a 15% average increase in life insurance premiums for those wanting to financially protect their loved ones.

"PTA effectively gave income tax relief on life insurance premiums at a person's highest marginal rate. For most people this was 22%, but for higher rate taxpayers it was as high as 40%. Most people aged less than 75 in the UK could benefit from this break, although wealthy people with large pension pots might not have been eligible," he added.

Johanna Gornitzki

Editor

 

[RogerL]

If dialogue between the pension providers and legislation drafters can't avoid problems like this, there's little point getting consumers involved. Perhaps you should target MPs directly although I doubt they understand the issues any more than we do.

 

[CliveV]

Disagree totally RogerL - This Government more than any other says it will do one thing, or a series of things, and then quietly, when it hopes nobody is noticing, it backtracks.

On pensions alone:-

a) It had said that property could be included via a SIPP - Retracted at the last minute this time last year

b) It said that purchasing an annuity was not going to be compulsory after age 75 because in was introducing the "Alternative Secured Pension" (ASP) which is a kind of Drawdown. But now it says that only certain religious groups will benefit (thereby breaking this governments own Religious discrimination laws!) - A disingenuous statement quite wondrous even by their standards

c) It stated that a Final Salary scheme must be labelled "secure" - when all in the industry new that such a scheme was only as secure as the company that ran it! - Now when even the parliamentary Ombudsman has stated that the Government is to blame for the chaos and lost pensions - this Government refuses to accept the Ombudsman's findings.

d) The parliamentary Ombudsman is also looking at the selective tax Gordon introduced on funded pensions. But currently under the explicit instructions of Gordon Brown, the Treasury has refused to pass the documentation over to the Ombudsman. A "staggering abuse of parliamentary procedure" - according to the Ombudsman.

e) And now we have Gordon stating that Pension Term Assurance - re-introduced just 8 months ago, is likely to be withdrawn.

RogerL - If you think it matters one jot what the pension providers say to Government you are sadly mistaken. It ignores fundamental legal and parliamentary process on a daily basis!!! So what chance have we got!

The only thing this Government will respond to is the thought of losing votes. And that means making sure that as many people as possible get to know what they are up to.

A head in the sand attitude is definitely not going to change anything.

 

[RogerL]

CliveV - I didn't make my point very well. I think it's absolutely vital that pension providers engage totally with legislators since the pension providers understand the operation of any legislation better than anyone.

The issue is a complex one that few consumers understand. I would never advocate "head in sand" but see little point in being involved in issues I don't understand.

As this issue is so complex, perhaps the pension providers and financial advisors would do better to target their educational campaign towards the 600+ MPs rather than consumers.

 

[CliveV]

Breaking News - Money marketing 071206

- Mass exodus as providers leave the PTA market

Royal Liver, Bright Grey, Liverpool Victoria and Bupa

are the latest in a fast growing list of providers to

temporarily pull out of the pension term assurance

market following the U-turn in yesterday's pre-Budget

report.

And from our own retained advisory service:-

Consultations with the pensions industry will take place between now and the Budget next year but it is important that advisers take note of the following when advising clients:-

All Pension Term Assurance contracts that are in place up until 6th December 2006 will remain unaffected.

There may now be a possible removal of the current tax relief rules or a change in the death benefits structure from lump sum to income only.

RogerL - As I say - expecting the industry to be able to influence Gordon and his band of "tax 'em high (but not us!!)" civil servants is simply not on.

The "Consultative Documents" issued are a joke. It matters little what people with years of experience sya to them. It just gets ignored.

Remember the only reason why the tax on petrol prices was frozen was because people protested.

Gordon is getting away with stealing money from pensions, reneging on promises and misleading those in FS schemes such that some people have lost ALL their savings. And he is doing it BECAUSE PEOPLE LIKE YOU SAY THAT THERE IS NO POINT IN PROTESTING.

 

[CliveV]

Further input from Aifa

AIFA Update - December 7, 2006

Urgent Newsflash

PENSION TERM ASSURANCE

The Chancellor has announced in his Pre-Budget report that the Government is concerned about life insurance policies being sold as stand alone 'pension arrangements' eligible for tax relief, stating that this use of tax relief undermines the principle of tax-privileged contracts being used to provide income in retirement. The Government intends to work with the industry to explore further the pension term assurance regime between now and the effective date of next year's Budget.

Any changes the Government decides to make will not affect either personal arrangements entered into before 6 December 2006 or existing types of employer arrangements.

Action

All PTA business with a commencement date after today could be subject to a change in tax rules and this should be recorded as part of the advice process. In particular, members with pipeline business who have advised or recommended PTA to clients but have not yet put the policy on risk should advise clients, preferably in writing, of the possibility of this change. In light of this news, members may wish to reconsider recommendations.

AIFA's view

The Government has yet again made an announcement that further undermines confidence in its policy setting. Whilst purporting to encourage individuals to take more responsibility for saving and personal financial security, the constant threat of reversing decisions affecting the beneficial aspects of financial products does little to maintain confidence in the market. We will engage fully in the debate to secure the retention of tax relief on PTA.

Fay Goddard

Deputy Director General