Ian Neale, Aries Director, is a frequent contributor to the debate in the national pensions press.  Dave King and Gareth Stears, Aries Technical Consultants, also contribute.  Read their incisive commentary, and share unique insights into the problems and opportunities of pensions in the UK.  Here is a recent sample to get you copied in. Ian, Dave & Gareth welcome your response - just click here to send an email.


in Professional in Payroll, Pensions & Reward (CIPP)

Why and how pensions has become so complicated

Workers and employers pay contributions into pension schemes building funds out of which the schemes pay money to the workers to live on in retirement. What's complicated about that?

The answer in part is all the rules and regulations that encumber the process. Fifty years ago, however, pensions legislation hardly existed: just 29 pages in the Income & Corporation Taxes Act 1970. Even by 1988 it was still only 57 pages. However, the Inland Revenue (now HM Revenue & Customs (HMRC)) enjoyed wide discretion in interpretation, and its published guidance was already becoming very complicated.

Tax legislation sets the ceiling; social security law the floor. Prior to the Social Security Act 1973 that introduced preservation, there was no protection for pensions. The remorseless deluge since was fuelled by contracting-out; the clean- up operation - reconciliation of and now equalisation for guaranteed minimum pensions - will go on for years.

The 'Maxwell' scandal triggered the massive Pensions Act 1995, introducing sweeping new controls with a regulator (the Occupational Pensions Regulatory Authority), multiplying trustees' responsibilities. The Welfare Reform and Pensions Act 1999 introduced stakeholder pensions and pension sharing on divorce - arguably the most spectacularly tangled web of legislation ever woven. Pensions legislation twenty years ago had grown to 2,000 pages. Who could remember it all?

Then in December 2002 the government published proposals for a genuinely radical simplification . . .

July 2019   Read the full article


in Pension Funds Insider

If you go to the doctor and get given a prescription, it's likely you'll take the medicine. If a qualified solicitor gave you legal advice, you'd probably follow it. But would you trust a financial adviser?

Maybe not. Why, since financial advisers belong, like doctors and solicitor, to a regulated profession? But that's not enough for most people. For a start, we're all too aware of the historical baggage for which the label 'mis-selling' was coined.

If our health is not so good, on the whole we tend to attribute it to misfortune, rather than feeling unfairly treated. By contrast, we're prone to compare our wealth (or lack of it) with that of others, and all too easily we find cause for complaint. "That's not fair" is a criticism to which everyone is sensitive.

For example, many women in their late fifties have been shocked to discover they would not be getting a state pension at age 60 as they had always expected; hence the WASPI and Backto60 campaigns. Over a million adults earning between £10,000 and £12,500 per year are not getting the tax relief they were led to expect on their pension contributions, because they've been enrolled into a scheme operating net pay. That doesn't seem fair either.

Then there is the gross disparity between members of Defined Benefit (DB) and Defined Contribution (DC) pension schemes when it comes to the Lifetime Allowance (LTA). The former can accrue an annual pension of £50,000, index-linked to boot, without becoming liable to an LTA tax charge. A DC pot of £1.055m (the current LTA) could barely buy a pension of half as much. . . .

11 June 2019   Read the full article


in Professional in Payroll, Pensions & Reward

Many employers in the education sector are facing huge cost increases from September this year, as a result of Government plans to force a 43% increase in their pension contributions.

The Teachers' Pension Scheme (TPS) is one of the largest unfunded public sector pension schemes, alongside those relating to the NHS, civil servants, and the armed forces. "Unfunded" means that although employers and employees pay contributions, these go directly to the government: crucially, the amount does not cover the full cost of paying pensions. Currently there is an annual shortfall of £4bn, which the government covers out of borrowing: in other words adding to the public sector net debt (ie the deficit) each year.

A furore was triggered last September by a Treasury announcement that to begin to plug this gap, employer contributions to the TPS would rise from the current 16.48% to 23.6% from 1 September 2019: a 43% increase, with only 12 months' notice. The basis for this is a reduction to the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate, from CPI+3% to CPI+2.4%, to reflect a more realistic assessment of the future growth GDP growth rate. This is a case of government 'grasping the nettle', prompted by the Office for Budget Responsibility.

Employer contributions to the NHS and Civil Service schemes are also going to rise by similar (but slightly lower) amounts. However, less than 75% of TPS member teachers are employed by state-funded schools and colleges, and in any case the politically-charged academisation programme has taken away control of budgets from local authorities, . . .

June 2019   Read the full article

Do you agree? Click here to send your response, question or challenge to Ian


Aries Insight Features
Aries House
29 Station Road, Desborough, Northants NN14 2RL
Tel 01536 763352