The monumental changes to pension legislation due to take effect in April 2015 have the potential to either enthuse the masses, who may embrace the new degree of flexibility on offer, or to create more confusion and further discourage public engagement.
While other financial industries have continued with relative continuity in overriding rules and regulations over the past 15 years, pensions have been subjected to constant changes and reforms.
Successive governments have tinkered with the state pension to the point that many people under the age of 50 may wonder if they will ever reach retirement age. In the space of six years we have watched the lifetime allowance system also change dramatically to restrict the ability of higher earners to accrue pension entitlement, while the relief on the contributions being paid has also reduced.
These developments could deter higher earners and, in particular, company decision makers from placing significant funds into pensions or prioritising employer provision beyond basic compliance.
We have witnessed two attempts at workplace reform with the introduction of stakeholder pensions and auto enrolment. The former has clearly failed the test of time while the jury is still out on the latter, with many key questions still to be answered: will the contribution requirement increase? Will the auto enrolment vehicles develop? Will lifetime contributors at the minimum level find themselves sorely disappointed at normal pension age?
When planning for retirement, people want a degree of certainty and stability. There are however, so many questions hanging over the future of pensions. This creates a real danger that consumers will switch off and look at alternatives such as investing in the stock market or buying property, both of which are far from risk-free options.
Regardless of who wins the next general election, the next UK Government needs to let existing reforms bed in so we can restore a level of public confidence. Further tinkering will be counterproductive and could result in less, rather than more, people making long-term provision for what should be their golden years.
• Chris Roberts is trustee representative of Dalriada Trustees Limited