The end of a turbulent 2010 for pensions

In the forever changing landscape of pension rules, Arthur Childs (pictured) believes the change to women's retirement age will create the most difficulty.

This has been an historic year for pensions, if only in terms of proposed reform to a bewildering and arcane world.

We have been here before. In 2006, pensions A-Day was a bid for wholesale simplification. However, the new rules soon became even more complex, so this time the message is rejuvenation.

What the coalition government is doing

‘The new government promised to "reinvigorate pensions and retirement" with its reforms programme,’ says pension expert Ros Altmann.

‘We certainly need that! Interest rates stayed at record lows, falling annuity rates and ongoing pension deficits all damaged pensions in 2010.’

On a positive note, says Altmann, abolishing the default retirement age was an essential part of the solution to the pensions crisis, as was the coalition’s rewriting of plans to restrict tax relief on pension contributions.

Altmann thinks the proposed £50,000 annual contribution limit is better than the ‘ludicrously complex’ taper relief rules designed by Labour.

Meaningful reforms

The previous government recognised the looming pensions crisis but was slow to implement meaningful reforms, such as extending retirement ages or boosting the state pension. The coalition plans to introduce a universal state pension of £140 a week by 2015 thereby removing means testing. By 2020 the pension age for men and women will be 66. The age at which women retire, currently 60, will be raised to 65 by 2018.

Altmann says this has caused ‘uproar’ among women who feel they do not have time to prepare for the change.

This is echoed by Arthur Childs, director of Arch Financial Planning. ‘The most difficult change is the raising of the retirement age for women. Many women who started the year expecting to retire on a full state pension at 60 will now retire at 66.’