The Investing and Savings Alliance (Tisa) has called on HMRC, HMT, the FCA, TPR, and the DWP to change four aspects of pension decumulation policy in order to improve consumer retirement outcomes.
Tisa requests that the timing of trust-based DC wake-up packs be aligned with FCA requirements to ensure that all scheme members receive a consistent communication journey before retirement. Tisa says an additional section should be added to cover life expectancy, linked to the ONS calculator to prompt people to think about how long their retirements might be.
Tisa also requests that the MPAA limit be raised to the previous limit of £10,000. Furthermore, Tisa believes that the Block Transfer rules, which allow individuals to keep their pre-2006 protected retirement age (PRA) or tax-free cash (PTFC) on transfer, should be repealed. Anyone with a PRA or PTFC should benefit from the pension flexibility introduced to improve retirement planning and outcomes. The Block Transfer rules in the Finance (No 2) Bill proposes easements for those who hold the new 2021 protection but do not currently propose extending this to other forms of protection, which is inconsistent. Furthermore, these requirements can have an adverse impact on Value for Money consolidation exercises.
Finally, Tisa urges HMRC to use dynamic coding to update the PAYE process for pension withdrawals to ensure accurate tax deductions and the avoidance of large-scale overpayments. This should be part of their 10-year administration strategy to create a trustworthy and modern tax system.
Tisa head of retirement Renny Biggins says: “Unlike Accumulation where the main beneficial objective is to create a pension pot as large as possible, Decumulation is a much more personalised journey specific to individual circumstances. We are not calling on widescale reform with this particular set of proposals but would like some enhancements made to the existing framework to reflect the significant shifts we have seen since these rules were originally introduced.”
