“Finally we received on clarity on the reduction to the pension Money Purchase Annual Allowance and the industry will be pleased to be able to advise appropriately on this change that has been stuck in limbo for months. This policy has been a thorn in financial advisers sides as it made it difficult to advise some clients, who could be affected, with any degree of certainty.
“Uncertainty and changes to pensions tax rules are too often bedfellows. The recent Retirement Income Study from the FCA noted that this distrust is causing people to make rash decisions about their retirement provisions and found that 'most pots are fully withdrawn and consumers withdraw their savings partly because they have limited trust in pensions.' We urge the new government to carefully consider its future policies and halt this unpalatable ride.
“However, the cut to the MPAA is at odds with the direction of travel in the retirement market and those planning for retirement. Giving people the freedom to withdraw retirement income as and when required has made a flexible transition to retirement possible. Many will prefer to phase into retirement, reducing their working hours and topping up income with pensions. But under the MPAA, those that chose to top-up income with a retirement fund and then later make contributions during period of work could be punished by this regressive curb on the standard annual allowance.”