In a letter to chancellor Phillip Hammond, Bell said that these issues have been “compounded since the advice gap was created following the retail distribution review”.
Bell criticised the speculation surrounding “set piece events such as budgets and autumn statements” that create uninformed speculation and “undermine trust in the stability of the system”.
He added, however, that Hammond has an “opportunity to adopt a new approach” and offer people “certainty the rules around products they invest in are not going to change every year”.
Simplify Isas
The government’s attempts to build on the popularity of Isas means that what was once very simple and straightforward, has become more complicated, Bell wrote.
“This should be accompanied by a pledge not to alter the key rules on pensions tax relief for [...] say 10 years.”
“This mounting complexity risks confusing investors and putting people off saving for their future.
“Now is the time to get a grip of the Isa system,” Bell said. “There only needs to be one Isa, with one set of rules, albeit there could be variations within that set of rules to enable the government to achieve its objective.”
Independent pension commission with a 10-year pledge
“The same emphasis on simplicity needs to be applied to the pension market,” he added.
While Bell conceded that pensions are inherently more complicated, “the fact the rules change so often is a deterrent for many people”.
He called for a cross-party, cross-industry consensus on how government incentives can be best used to boost pension savings.
“A newly formed, independent pensions tax commission should have a period of time to assess the existing system and what changes, if any, are necessary.”
Bell recommended that, following the review, all political parties could “use it as a basis for reaching a consensus, similar to that achieved over auto-enrolment”.
“This should be accompanied by a pledge not to alter the key rules on pensions tax relief for […] say 10 years.”
Industry agreement
AJ Bell is not alone in its call to the government to stop making changes to the pensions and savings sectors.
Last week, Royal London published a policy paper ‘Pensions Tax Relief: Stop the Salami Slicing’, which highlighted the impact the constant tinkering with tax relief has had.
“We called on the chancellor to fulfil his pre-election commitment not to make any changes to pension tax relief during the lifetime of this parliament,” director of policy Steve Webb told International Adviser.
“We agree that pensions should be a long-term business and twice-yearly speculation about changes to tax relief are unhelpful. “Regarding Isas, we agree that they have become much more complex and are particularly concerned about the Lifetime Isa (Lisa), which could undermine workplace pension saving for younger people.
Webb continued: “Just at the point that we have got over two million extra people under the age of 40 saving into a workplace pension through automatic enrolment, it is very risky to launch a rival product focused on younger savers which may trigger opt-outs.
“At the very least we think that the Lisa should be delayed until automatic enrolment is complete,” he said.
