taking professional advice
How far does the present Government’s strategy encompass
provision for the self-employed and the owners of businesses
who have been unable to make provision for their own future?
The Pensions Minister accepted that there are still questions to
resolve in relation to this significant segment of the population.
Taking the right decisions
sufficient information available. Part of pension benefits. “The important thing
that process will be to leave the inde- about pension savings is that the proc-
As employers, you will need to choose pendent financial advisors in no doubt ess is unique in that it involves a very
whether to take your staff into an exist- about what the reforms will mean in long term strategy. The closer a person
ing pension scheme, identify a new practice.” gets to retirement age, the more essen-
workplace scheme, or have them auto- tial it is that the underlying investments
enrolled in the Personal Accounts struc- move from even the slightly risky to the
ture. As experienced managers and busi-
Extending the investment base
totally safe.
ness owners, you are the best qualified With an additional £10 billion of savings “It has to be remembered that pensions
people to run your enterprise. entering the pensions sector each year are in a very privileged position from a
But you would be right to question once the new provisions have been im- tax perspective – there is income tax re-
whether you have the specialist skills to plemented, a case could probably be lief at the front end and no Capital Gains
determine what to do about your employ- made for extending the scope of the in- Tax on the enhanced capital sum when
ees’ pension arrangements. Decisions vestment at which those funds could be pension is drawn.
which can affect a large part of each targeted. “If the state is to contribute so much in
person’s pension income thirty years Parallels might be drawn with the En- this way, it is important that only the most
down the line cannot be taken without terprise Investment Scheme, where in- responsible investment decisions are
time-consuming research. vestors may place funds in unquoted taken. Members of the scheme should
Angela Eagle took up that point. “Some companies and have any capital losses not have to fall back on the state later for
employers have the skills and resources offset against income tax should the ven- support if those decisions have gone
in-house to select the appropriate course ture fail. wrong in the meantime.”
of action: many others will involve their Might there not be a case for employ- Ms Eagle was keen that the pensions
professional advisors. We are in consul- ees to be given the option of specifying sector should play its part fully in bring-
tation with the representative bodies, that their savings are placed in invest- ing the reforms to fruition. Having given
including the legal profession, to ensure ment vehicles which could secure its support in principle to the Turner Re-
that we are acting in the greatest inter- greater returns, even if the underlying risk port on the future of pensions and the
est of the employees. were greater? two Acts of Parliament which evolved
“The Personal Accounts Delivery Au- The Minister was adamant that there from that analysis, the industry still had
thority has a duty to ensure that there is should be no undue speculation over a long way to go.
“The pension savings process involves a very long term strategy. The closer a person gets to retirement age,
the more essential it is that the underlying investments move from even the slightly risky to the totally safe.”
42
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The Informed Executive
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