Ahead of this Wednesday’s Budget announcement, Skandia, part of Old Mutual Wealth, is repeating its call for the Chancellor to improve access to workplace financial advice, along with four other key changes for a clearer market.

Skandia’s five points, sent to the Treasury as part of the company’s pre-Budget submission, are intended to address the key issues facing pension savings in the UK – namely regulatory complexity and the challenges faced by an individual when moving their pension savings to provide retirement income.

The company’s five changes for a clearer pension market are:

1. Increase Workplace Financial Advice

In 2004 the Government introduced an exemption from income tax where pensions financial advice was made available to all employees. The value of that advice was restricted to £150.

The Government should double that amount and the advice should not have to be restricted to pensions, it should encompass all forms of retirement savings. To limit the extra costs, and to further increase the chances of employers engaging with the process, they should be given the option to restrict the provision of advice to new employees, those approaching retirement and those approaching a significant life event.

2. Abolition of Lifetime Allowance for Basic Rate tax payers

The declarations that have to be completed to ensure that a Lifetime Allowance charge does not apply when someone accesses their pension savings only serve to add to the confusion for an individual converting their pension savings into retirement income.

If an individual can confirm that they have never paid higher rate income tax, the Lifetime Allowance should not apply to them. It is extremely unlikely that a person who has not paid higher rate income tax would have pension savings anywhere near the Lifetime allowance.

3. Increase small pots commutation limits

The Government should increase the small pots limit to £10,000, the point at which the annuity market becomes competitive. The number of small personal pension pots being commuted should be unrestricted.

4. Change to calculation of Capped Drawdown limits

The current GAD tables used to limit Capped Drawdown reflect annuity calculations. These calculations are not relevant to an investment portfolio used for Income Drawdown. The tables result in fluctuations in maximum income calculations that reflect movements in gilt yields rather than the performance of the underlying investment portfolio.

The Government should consult on replacing the relevant annuity concept from April 2016 with factors that are static and relate to the underlying performance of the investment portfolio. Such an approach would simplify Capped Drawdown, maintain the Government’s view that those taking capped income should not deplete their pension assets too quickly, and remove anomalies the current system produces.

5. Abolition of Benefit Crystallisation Event (BCE) test at age 75

All other BCE tests relate to a pension event. Therefore it is easy to engage with pension scheme members to get the necessary declarations and information to ensure benefits provided are within the Lifetime Allowance. Reaching age 75 is not an ‘event’ in the minds of a pension scheme member. Many therefore ignore requests for information which leads to unnecessary post age 75 administration on behalf of schemes and HMRC. This will become greater as the population ages and more people have pension savings from which an annuity has not been bought at age 75.

The Government should remove the age 75 BCE test and apply the BCE test to events as and when they occur after age 75. This would simplify the pension system and make it more relevant to an ageing population.

Speaking ahead of the Budget announcement, Adrian Walker, retirement planning manager at Skandia, said: “We believe that one of the biggest obstacles to engagement with retirement saving is the complexity of the market. This complexity dissuades individuals from making key decisions that will affect their future.

“While suggesting further changes to the regime may at first appear counter-productive, we believe that the measures we suggested in our pre-Budget submission will make the move into retirement that much easier and less confusing, without causing a material adverse impact on the Exchequer.

“These measures will reduce complexity, go some way to increasing financial capability and lead more people to make informed decisions about their retirement savings.”


For more information contact

Tim Skelton-SmithOld Mutual Wealth02380 916 99807824 145

Notes to editors:

Quilter is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

On a ‘go forward basis’, Quilter oversees £ 111.6 billion in customer investments (as at 31 March 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset and single strategy investment solutions; and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Old Mutual Wealth’s multi-asset investment solutions business.

The Quilter businesses will be re-branded to Quilter over a period of approximately two years following separation from Old Mutual:

  • Intrinsic to Quilter Financial Planning
  • Private Client Advisers to Quilter Private Client Advisers
  • The Multi-Asset business to Quilter Investors
  • The UK Platform to Quilter Wealth Solutions
  • The International business to become Quilter International
  • The Heritage life assurance business to Quilter Life Assurance
  • Quilter Cheviot will retain its name.

On 19 December 2017, Old Mutual Wealth announced that it has agreed to sell its Single Strategy asset management business to the Single Strategy Management team and funds managed by TA Associates. The proposed transaction is subject to customary closing conditions, including regulatory approvals. 

Quilter is part of Old Mutual plc, a FTSE 100 group that provides investment, savings, insurance and banking. For the year ended 31 December 2017, Old Mutual reported an adjusted operating profit before tax of £2.0 billion. For further information on Old Mutual plc and the underlying businesses, please visit the corporate website at


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