Analysis
By Peter Thompson Chairman of the National Association of Pension Funds

We are relieved that the long-awaited green paper includes proposals to simplify the horrendously complex tax and regulatory regimes for workplace pension provision.

The government has clearly listened to research carried out by many in the pensions community, including the NAPF, and we welcome this approach.

We are disappointed, though not surprised, that the green paper has fought shy of simplifying the state pension system.

The complex layers of state retirement provision include the basic state pension, minimum income guarantee, pension credit and the state second pension.

These make it very difficult for many people, especially the less well off, to decide if and how to save for themselves.

Stating the simple

It is this complexity which undermines consumer confidence in pensions.

The government could have taken this opportunity to simplify state pension provision Peter Thompson

The government could have taken this opportunity to simplify state pension provision, allowing consumers to make their own top-up arrangements, either through their workplace, or with a private pension provider.

The green paper is, however, a positive contribution, picking up on much of what Alan Pickering and Ron Sandler proposed five months ago.

The NAPF welcomes government proposals to:

• Radically simplify the tax regime for pensions;
• Extend opportunities for older workers, who have historically low activity rates, and allow for a more flexible approach to retirement;
• Scrap the minimum finding requirement, and replace it with scheme-specific funding standards
• Introduce a new and more pro-active regulator, to help cut the costs of regulation and legal fees;
• Change the rules on scheme wind-up to give better protection to pension scheme members, as suggested in the NAPF's own policy document, "Pensions - Plain and Simple".

However, with pensions hitting the headlines almost every day, it seems to have taken a very long time for the Pickering and Sandler Reports to have become Government proposals.

There is now a pressing need for the Department for Work and Pensions to push ahead with reform.

Welcome review

The Inland Revenue tax review, launched at the same time as the green paper, makes a number of radical and welcome proposals which will make it easier for firms to retain their pension schemes.

The review offers the genuine prospect of some employers being able to offer schemes where there currently are none.

Proposals to reduce from eight to one the number of tax systems facing occupational pension schemes are particularly welcome.

Having listened, the onus is now on the government to act. The outstanding question mark hangs over the timing of these changes.

The tax proposals involve a four month consultation process - which means no change for at least another 16 months.

For many pension schemes and their members, this could be like getting your Christmas presents on Boxing Day.