The Chancellor used his Autumn Statement to take steps toward banning the practice of cold-calling people about their pensions.
At Robert Nicholas Financial Advisers we wholeheartedly welcome this move as a step that could save the retirement pots of tens of thousands of people.
Decisions on pensions are a very personal and important step. They are something to be considered with all aspects of your situation, aspirations and realistic likely future position taken into account.
There has been a growing problem with companies cold calling people and using carefully scripted social engineering practices to convince them that what they offer is in the person’s best interests.
What actually usually follows is a process that can unnecessarily damage the value of that individual’s pension fund – if not outright fraud which results in a total loss.
While many people receiving such calls would instantly smell a rat, there are vulnerable individuals who might genuinely believe the caller has their best interests at heart. They are the ones who will become the victims and it only takes a small percentage of those called to bite for it to remain worthwhile for the callers to keep using these methods.
This move comes in response to a petition backed by many responsible practitioners in the pensions sector and it’s a credit to the Government that it has decided act now.
One weakness though is that it might not cover text and email approaches yet, so there could still be a risk of people being targeted through those channels. The best thing we can do to combat that for now is to continue to educate people not to respond.
There is also a possibility that if cold-calling is outlawed in this country, those companies will simply move their activities to other countries where they can get away with it, but that remains to be seen.
If you have any doubts about whether your pension is in the right place or performing as it should, find a reputable adviser of your own choice. Someone local to you provides an even better degree of assurance because you can meet them easily, rather than fighting to get through a phone system when you need some support.
It’s also worth noting that the measures are not yet in effect and the Government is still consulting on them so, in the meantime, please exercise caution about cold calls, both for yourself and for your friends and relatives who might be at risk.
What else did the Chancellor have to say?
Many people would say it wasn’t the most exciting of Autumn Statements in terms of changes to policy or tax rates. However, we did learn that it was to be the last of its kind, with a lesser spring statement replacing it next year and a proper budget in the autumn. This is probably to be welcomed. Who needed two budgets a year anyway?!
Aside from the important move on pension scams, highlights of things also learned are:
- The income tax personal allowance will rise to £11,500 from April next year and the higher rate band will increase at the same time to £45,000. The Government also said it intended to stand by its past pledge to make those limits £12,500 and £50,000 respectively by the end of this Parliament.
- Some of the benefits of certain salary sacrifice schemes are to be removed from April next year where the Government feels they might be being abused. However that won’t apply to pensions, pensions advice, child care, ultra-low emission cars and Cycle to Work schemes. Any arrangements that are in place by April next year will be protected until April the following year and cars, accommodation and school fees arrangements will be protected until 2021.
- Insurance Premium Tax, which we all pay on policies, is going to rise by two per cent to 12 per cent from June next year. In theory this might have been softened by the announcement of moves to tackle the fraudulent whiplash claim problem, but there are doubts whether that would reduce motor premiums by the average £40 per year the Government claims, even if the fraud problem can be solved…
- There will a new three-year Government bond issued next year through National Savings and Investments with around a 2.2 per cent gross interest rate. We have to wait until the Budget for more details though.
- Individual Savings Account (ISA) limits will increase from £15,240 to £20,000 in April next year. That’s a limit per person, per year.
And those, as far as we are concerned, were the highlights of the Autumn Statement.