Money Marketing Weekly Wrap-Up – 29 Jul to 02 Aug

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Steve Webb: Here’s where to expect pension reform under Labour

Steve Webb anticipates significant pension reforms under the new Labour government, which holds a majority but lacks funds. Key speculations include changes to tax-free cash, flat rate tax relief, and means-testing the state pension. Immediate concerns are people withdrawing tax-free lump sums preemptively. Potential reforms might include reducing the tax-free cash limit or reinstating the lifetime allowance (LTA). However, drastic changes are politically risky. The focus may shift to taxing pensions on death and targeting the wealthiest, avoiding broad voter impact.

FCA announces plan to reduce regulatory burden on financial services firms

The FCA has announced plans to streamline financial services regulations to reduce burdens on firms. This announcement comes just two days before the first anniversary of the Consumer Duty. The regulator is urging professionals to identify rules that could be removed or simplified if they overlap with the Duty.

LTA charges hit record highs

In 2022/23, schemes reported 13,080 lifetime allowance (LTA) charges through Accounting for Tax (AfT) returns, according to the latest HMRC annual private pension statistics published on July 31. This marks an increase from the 11,720 LTA charges reported in 2021/22. The total value of LTA charges reached a record £516 million in 2022/23, up from £501 million the previous year.

CGT speculation mounts after third highest bill in 26 years

New figures from HMRC reveal that 369,000 people paid £14.4 billion in capital gains tax (CGT) in 2022-2023. This represents a 15% decrease compared to the previous year but remains the third highest tax bill since 1998. The decline is attributed to a challenging year for stocks and shares investors, while CGT from property sales increased. London and the South East accounted for almost half of all gains and CGT paid.

Quilter hires new COO

Quilter has announced the appointment of Sarah Houlston as its new Chief Operating Officer (COO). She will join Quilter’s executive committee, replacing current COO Karin Cook, who will retire at the end of the year. Houlston brings 35 years of experience in the financial services industry and was most recently COO at RBC Wealth Management. Before that, she served as COO at the Royal Bank of Scotland.

Winter fuel payment to be scrapped for those not on pension credit

New Chancellor Rachel Reeves has announced plans to scrap the winter fuel payment for those not receiving pension credit, aiming to save £1.4 billion. Reeves stated, “It was not a decision I wanted or expected to make,” but said it was necessary to help address the £22 billion deficit in public finances inherited by Labour. The move is expected to affect around 10 million pensioners and seven million pensioner households. The £300 winter fuel payment, introduced by Labour Chancellor Gordon Brown in 1997, will now be means-tested.

FCA imposes restrictions on wealth management firm

The Financial Conduct Authority has imposed restrictions on wealth management firm London Stone Securities Limited for failing to deliver good outcomes for clients. As a result, the firm cannot undertake any regulated activity, charge further fees to existing clients, or take on new clients without permission. Additionally, it must withdraw all financial promotions and retain assets within the business. The regulator stated that the company was charging excessive fees, which did not appear to be justified, clearly related to client benefits, or provided fair value.

‘Significant milestone’ as new DB funding code is laid out in Parliament

July 29 marked a significant milestone in the trillion-pound defined benefit (DB) pensions market as The Pensions Regulator’s (TPR) new DB funding code was laid out in Parliament. TPR stated that the new code complemented regulatory changes and provided a framework that protected savers while offering market flexibility. It outlined guidance for trustees, sponsoring employers, and advisers on how to comply with funding and investment strategy requirements. Once in force, it replaced the existing DB funding code introduced in 2014.

SJP reports record FUA and increased inflows in first half of 2024

St. James’s Place (SJP) reported strong performance for the six months ending June 30, 2024, setting a record for funds under management (FUM) at £181.9 billion. The firm’s gross inflows reached £8.5 billion, up from £8 billion in the same period last year. Despite a slight decrease in client fund retention (94.6% compared to 95.6% last year), it achieved net inflows of £1.9 billion. This represents an annualized 2.3% of opening FUM, down from 4.6% last year. Additionally, SJP reported a 3% increase in its client base, reaching 988,000, up from 958,000 at the end of 2023.

Ignore calls to adopt 30% rate of pension relief, government urged

Accountants and business advisers at James Cowper Kreston have urged the government to, at least temporarily, ignore calls to adopt a flat 30% rate of pension relief. They argue that implementing such a change would be “horrendously complicated” and could adversely affect key public sector employees. Reports suggest that proposals presented to Chancellor Rachel Reeves include introducing a flat 30% tax relief rate on pension contributions. This change would reduce the current tax relief available to higher-rate taxpayers, which is 40% on earnings over £50,000 and 45% on earnings over £125,000.