You may have noticed that it has been very busy on the pensions front recently. Firstly there was the publication of the long-awaited Turner Report, quickly followed by a significant government Uturn on the new pension rules applying from April 2006. Malcolm Robinson, from HR Advantage's pension partner Haines Watts has provided this short update.

The Pensions Commission, chaired by Adair Turner, was tasked with providing suggestions for the framework to improve the nations pension provision over the coming decades.

The recommendations of the report were really no surprise:

• The State pension age should be increased
• The level of the State pension should be increased
• Means testing of State benefits for pensioners should be reduced
• There should be some compulsion for employers and employees to contribute towards private pension provision

More surprising was the announcement by the Chancellor in the pre-budget speech that the Government has decided to reverse the decision to allow more esoteric investments in pensions, including direct holdings of residential property, fine wines, antiques and works of art. (In fact such investments will be allowed but taxed in such a penal fashion that investors are unlikely to consider them).

Does this mean that Self-Invested Personal Pensions (SIPPs) will not become the mainstream pension product that many had forecast?

Our opinion is that the recent focus on the flexibility, investment choice and control that SIPPs offer should mean that they still do become the product of choice for discerning pension investors in spite of Gordon Brown's U-turn.

A new pension product, the Group SIPP, will be launched by several pension providers after Christmas and looks certain to create significant interest for firms seeking to offer competitive benefit packages for staff and for those reviewing existing schemes.

After the last couple of weeks the future shape of our pensions may still be uncertain but employers wishing to offer staff a superior pensions package are about to have something much more interesting to offer than has been the case up to now.

More Information?

Please contact Campbell Ritchie on 01494 451 681 or email campbell@hradvantage.co.uk for a discussion on your current arrangements or to point you towards further advice and guidance from our pensions experts.

December 2005