I must say Mr Hunt is routinely catching us financial hacks out on a regular basis, as he did this week with his Mansion House pension reforms.
Is he becoming like the Scarlet Pimpernel I wonder? Seemingly mild-mannered and meek most of the time but suddenly donning a cape and a sword to slash through pension regulation and red tape when needed.
Certainly he is developing a reputation for the unexpected. First the Edinburgh Reforms and then this week’s Mansion House Reforms.
We must wonder what he will next pull out of the hat.
Most Manson House speeches given by Chancellor’s are relatively dull affairs, a call for public sector borrowing restraint here, a plea for more investment in the UK economy there. You get the picture.
But not Mr Hunt, I arrived at work on Tuesday to find a deluge of press releases and documents from the Chancellor following his Mansion House pledges on Monday night. No less than 28 documents covering all many of pensions and financial reforms. A huge amount of information to digest. I needed a second strong cup of tea, I can tell you.
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I will not go into huge detail on all the reforms for space reasons and you can read them here and in our other reports.
One of key changes, widely flagged, was a ‘compact’ with the pensions industry to pledge to invest up to 5% of pension funds in UK infrastructure and high growth businesses in the UK.
Most people will support this but I remain sceptical as to how many of these pledges turn into actual investment. There is also the question of whether pension fund investment should be ‘directed’ into particular sectors, regardless of the returns from those sector. To be fair there is some merit in investing in UK plc and pension funds, which have the patience to invest very long term, are probably the vehicles to do it.
He also announced a consultation on a new consolidator for small pots and the scrapping of the PRIIPs regime, to be replaced with something more post-Brexit in style.
One reform, however, caught my eye more than others; his paper called ‘Helping savers understand their pension choices: supporting individuals at the point of access.’
This reform potentially has significant implications for Financial Planners who provide advice on pensions decumulation, which is likely to be most of them.
While annuities have made a storming comeback recently, income drawdown has become the de facto way to withdraw money from DC pension plans. Many planners see decumulation advice as their domain and they are well placed to provide advice on an area of complexity.
Mr Hunt wants to change that, possibly. He plans to give pension trustees and pension schemes a bigger role to step in at the point of retirement and give pension savers help on their decumulation strategy, if they need it.
He rightly points out that many people just take their money out of their pension and slap it unwisely into a bank account, often to their long term detriment.
So he’s coming from a good place, trying to help people make their money work harder and boost retirement income. However, to do this they will need advice and this is where things get a little vague.
The paper is out for consultation and I strongly recommend you read it and respond.
As it stands the paper could mean even more business for planners or it could mean planners being pushed to one side, with pension schemes possibly obliged to offer default or more templated decumulation options to the large numbers who do not want or cannot afford financial advice.
That may be better than nothing but it will not be as good as professional advice.
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Kevin O’Donnell is editor of Financial Planning Today and has worked as a journalist and editor for over three decades.
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