Pensions minister Guy Opperman has thrown his weight behind the idea of creating a new Pensions Commission.
Opperman said a Pensions Commission is needed to foster cross-party consensus on future retirement policy
AJ Bell believes any Pensions Commission must also look at simplifying the pension tax system
Tom Selby, senior analyst at AJ Bell, comments: “Political short-termism is the enemy of good pensions policy and ultimately damages retirement outcomes for millions of people. Automatic enrolment shows what can be achieved when consensus is forged and should be viewed as a model for future reforms.
“The fact the pensions minister sees the value in such long-term thinking bodes well, but the Government must broaden its thinking beyond the horizons of auto-enrolment to including pension tax relief too.
“While workplace pensions policy has been a relative sea of tranquillity, storms have been stirred up by the Treasury through incessant changes to retirement savings incentives in recent years.
“Since 2010 the annual and lifetime allowance have both been cut three times, while a hideously complex ‘tapered’ annual allowance has been brought in for higher earners.
“In addition, in 2015/16 the ‘money purchase annual allowance’ was introduced at £10,000 for those who had flexibly accessed their pensions – before being unceremoniously slashed to just £4,000 in 2017/18.
“This constantly moving feast puts people off saving for retirement and risks fundamentally undermining the central objective of auto-enrolment.
“With auto-enrolment fully in place, now is the time to instigate a review of the entire system, including pension tax rules, focused on simplification and encouraging more people to take responsibility for their own financial future.”