“At the moment I feel sorry for advisers” AJ Bell head of policy development Rachel Vahey told Money Marketing about where the profession finds itself with the lifetime allowance (LTA).
During the spring Budget 2023 (15 March) chancellor Jeremy Hunt abolished the pensions LTA in a bid to boost economic growth.
The policy is aimed at encouraging the over 50s who retired early during the Covid pandemic to return back to work.
It also aims to stop workers, particularly doctors, from reducing hours or retiring early due to tax charges.
The next day shadow chancellor Rachel Reeves said that Labour would reverse this move if it won the next general election.
In response to this Vahey said: “We need stability in pensions and the Labour announcement really put advisers in a difficult position”.
Vahey explained that “pensions always end up being politicised and it shouldn’t” and that advisers “are almost sitting there and thinking is this really happening”?
She also said that advisers “can only deal with what is in front of them” and “are stuck in the middle of this political spat”.
Additionally, she believes that HM Revenue & Customs (HMRC) need to do a lot of work on the abolition of the LTA and that “people should not think it is now done and dusted, as this journey is just starting”.
Vahey hopes the government works with the industry to put this change in place, as she noted that AJ Bell has experience in speaking with governments to help policy.
She added that “it is the most significant change since pensions freedoms”.
Earlier this month (June) AJ Bell research found that 72% of advisers predict the LTA to return in some form, whereas 19% see it as a possibility.
A smaller amount of 5% feel a future government would not bring it back and 4% feel unsure.
