Many of you will doubtless have spent the last few weeks trying to explain to senior executives what the Budget means for their company’s pension scheme.
How many of them have been most preoccupied by what the changes mean for their own ‘fat cat’ benefits, we will never know, but you would have to be a fool to think that vested interests will not lead to disengagement from schemes.
It is hard to think of a clumsier way of raising revenue from pensions than the one that the Chancellor has chosen.
It is not as if the post-A-day higher rate tax grab could go on for ever – a fair chunk of those earning over £150,000 would have been on course to hit the lifetime limit at some time soon, in any event. Surely reducing the lifetime allowance would have been a simpler and more easily understood solution than what we have now.
I am normally sceptical when taxes on the very rich provoke warnings of unintended consequences, such as was the case when the predicted mass exodus of wealthy expats following the introduction of tax on non-doms failed to materialise.
But while the complexity of the new rules may be a consultant’s charter in the short term, it does not bode well for private sector workplace pensions in the long term.
Employers have already been stretched to breaking point with the whole pensions piece, and the latest assault on it may prove too much.
Joe Public is not that bothered about pensions either, right now. Far more important is getting a pay rise, or simply keeping a job at all, even if it means reduced hours.
A recent report from Capita Hartshead shows that 28 per cent of employees have not joined company schemes, up from 26 per cent last year. If you wanted to downgrade your pension, now is the time to do it.
Personal Accounts are now just around the corner, and I would not be surprised if some employers were thinking of making the arrangement central to their benefits offering.
Many will do more, but this latest bout of pensions complification can only send more employers scurrying for the easy option. Perhaps the person who has come out best from April’s Budget will turn out to be Tim Jones.
This month I am pleased to welcome Teresa Hunter as our new ‘Final Word’ columnist on page 46, replacing James Daley, who has now moved on from The Independent. Teresa has years of experience across titles such as The Guardian and The Telegraph, and is currently personal finance editor of Scotland on Sunday. I hope you find her perspective always as fresh and sometimes as provocative as James’s was.
John Greenwood, Editor