providing for the sme
“The amount of lobbying indicates a high degree of self interest on the part of the private pensions providers.
It is in all our interest that these reforms are a success. We know that there are literally millions of people
who have no extra savings and have a real need to build up funds for a decent level of retirement.”
The Minister questioned the strategy reduce or clear commitments such as
adopted by the private pensions sector
Catering for the self-employed
mortgages.
over the years. “The amount of lobbying The government’s approach to meeting During the economic downturn of the
that has been going on over the years the balanced pension needs of today’s past two years, those cash withdrawals
indicates a high degree of self interest workforce is clear, but how far does that have provided a valuable buffer for the
on the part of the private pensions pro- strategy encompass provision for the smallest businesses whose owners have
viders, and I believe that they have failed self-employed and the owners of very not been able to justify bank loans or
to see the wood for the trees. It is in all small businesses who have been unable extended overdrafts. A strong case could
our interest that these reforms are a suc- to make provision for their own future? be made for deferring that particular
cess. We know that there are literally The Pensions Minister accepted that change until the economy has returned
millions of people who have no extra there were still questions to resolve in to an even keel.
savings and have a real need to build up relation to this significant segment of
funds for a decent level of retirement.” the population. “The self-employed can
be auto-enrolled in a Personal Account,
Annuity rules unchanged
but they would have to pay both the em- The government is proposing no change
Within the SME arena, you are
ployer’s and employee’s contributions – in the annuity deadline beyond its
only too aware of the demands
it is difficult to see how they can be in- present 75: this is the point at which
tegrated more effectively. holders of pension pots must have pur-
that your businesses have been
“The chances are, however, that most chased annuities with the sum that re-
making on cash flow. The
will already have some form of stake- mains after any cash withdrawals have
holder pension or other form of private been made.
chances are that you are putting
pension arrangement.” The fact that most people purchase
the interests of your staff ahead
their annuity within 18 months of their
of making the best possible
Ageing population profile
retirement would suggest that the 75 age
limit is academic. As Angela Eagle noted,
provision for your own future. You
The age profile of the UK population is “ The vast majority of people do not have
must do whatever you can now
moving slowly but inexorably upwards, the luxury of waiting 10 years from retire-
and the pensions infrastructure has to ment for their additional income.”
to redress that balance.
keep pace with that progression. The Minister may have focussed her
While some of the proposed changes attention on the reforms which will see
will not take place until well after the private sector pension provision ex-
working life of most people who are in tended across the workplace. Her under-
employment today – the retirement age lying theme, however, was to promote a
will have reached 68 by 2045, for exam- greater awareness of savings through
ple - more immediate changes are likely pension schemes at every level.
to have an effect on how you plan your Within the SME arena specifically, you
own future in the years leading up to re- are only too aware of the demands that
tirement. your businesses have been making on
Moving the age at which private pen- cash flow. The chances are that you will
sions can start to be drawn down from already be putting the interests of your
55 to 50 in 2010 is likely to influence in- staff ahead of making the best possible
vestors who have been accumulating pen- provision for your own future.
sion funds for most of their working life. You must do whatever you can to re-
The option to take 25% of the value of dress that balance. We will be looking
the fund in cash will necessarily be de- later in this section at the role of the In-
ferred for five years: under present ar- dependent Financial Advisor in deliver-
rangements, the tax-free funds which ing both sound advice and the highest
can be freed up at 50 are often used to quality products. §
The Informed Executive
43
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