1st Option responds to HM Governments call for pension proposals consultation
1st Option took the initiative to seek clients’ perspectives on the proposed changes and with their permission responded to the consultation on the Freedom and Choice in Pensions on their behalf
The survey found that 1st Option clients overwhelmingly support HM Government’s proposals to reform the pension tax framework. Of 200 survey respondents 91.5% felt that total control of the retirement income and retirement fund should vest with the taxpayer.
In light of this response from clients, 1st Option is strongly of the view that Government should not impose any restrictions or statutory overrides to prevent individuals taking advantage of the increased flexibility.
The survey also asked if clients were more or less likely to invest in pensions if greater flexibility was available. Of the total respondents, 84% felt that they would increase their retirement savings. Naturally, if this percentage is reflected across the UK working population, the impact on financial markets could be significant with much larger funds retained in pension funds.
Commenting on the ageing population, Iain Miller, pension specialist at 1st Option Financial Consultants Limited stated & lsquo;we agree that the earliest date that pension funds can be accessed should be linked to the rising state pension age. 1st Option believes that the rising date is compensated by the tax relief at entry on contributions and this gives Government the & lsquo;right’ to ensure that pension plan proceeds are used for wealth creation and income in retirement. Furthermore, we believe that consumers have the choice of utilising other savings vehicles (such as ISA’s) if they wish to sacrifice the tax relief in favour of greater accessibility.
Any such changes to the minimum pension age should be applied to all qualifying pension schemes. In principle we agree that the minimum pension age should be linked by formula to the State Pension Age. In the consultation paper Government suggests a link of 5 years. We believe that this is too restrictive for people who plan their affairs in order to retire early, and recommend the formula be based on 10 years from SPA.’