The original proposals for pensions simplification, as designed by Alan Pickering CBE, should be revisited to rejuvenate retirement savings, says Suffolk Life.

Director of marketing, John Moret, puts forward that proposals that suggested a single, universal pensions tax regime with four aims should be reconsidered. Improving choice and flexibility for providers, employers and individuals; improving competition amongst financial services firms; encouraging individuals to save for retirement; and reducing administration and compliance costs for employers, administrators, providers and advisers, were the goals for the original proposals.

"Four years after implementation on A-Day, 1st April 2006, it is clear that none of these benefits have been delivered," said Moret. "That has led to many commentators proposing more fundamental reforms built around the ISA savings model. However, I believe that Alan Pickering's basic proposals were well reasoned, and are as valid today as they were ten years ago. The reason that simplification failed was that the previous Government chose not to fully adopt them and then introduced even more layers of complexity through subsequent legislation."

The original proposals, plus a number of amendments, should be revisited, Moret said.
A reduced annual contribution allowance, allowing a reasonable element of investment growth to be achieved with the lifetime allowance, should be introduced, with a limit in the region of £40,000-£50,000 per annum.

Early access is on Moret's list, allowing 25 per cent of accumulated pension savings at any time to be withdrawn. This, he said, would allow the tax free cash element to be drawn down at any point to the extent it has been funded.

Pension savings should be allowed to hold any type of investment but with a penal tax charge imposed where any benefit - other than a genuine investment return - is gained from holding the investment, and a move to a single regulator and single set of regulations that govern all types of pension provision should be introduced.

"I believe that by reverting to the original simplification proposals with the amendments outlined above the whole pensions savings marketplace would be re-energised. Confidence in the pensions industry could be restored and pensions would once again be the rock on which long-term financial security is based."

Moret added that although there will be legacy issues, these should not distract from the primary aim of a single set of simple, clear and consistent rules.

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