What might this look like if government want to change who receives tax relief? It could evolve the annual allowance system; both carry forwards and annual limits in a manner that keeps everyone engaged in pensions. Or, if the government want to make pensions more affordable for lower earners, it might evolve to a non-contributory employer-pays system.
Is changing tax timing any different?
Changing when, not how much or to whom, tax incentives are provided is neutral to outcomes. With effective communication, oversight and implementation, it should be neutral to behaviours.
It would be a huge ask of the pensions industry to adapt seamlessly for workers and pensioners.
Yes, we would need to innovate ways to make this work for defined benefit, typically public sector works; for example, evolving the pensions debit system that administrators use for pension sharing. And yes, this would take time to implement well.
But we have hugely talented people working in pensions who care and want to make a difference. The pensions industry can leave a lasting legacy of sustainable UK growth for the benefit of the next generation. If this was to be the case, timing really would be everything.
Calum Cooper is head of pensions policy innovation at Hymans Robertson
