News updates

21st April 2010

Political parties miss the point on pension policies according to research from Brewin Dolphin

- 62 per cent of Britons want tax changes to aid investment
- 51 per cent of Britons want to see cut backs in public sector pension bill

Almost three quarters of all Britons (70 per cent) agree that none of the political parties have so far done enough to explain their policies on pensions, according to a ComRes poll for Brewin Dolphin. ComRes interviewed 1024 UK adults by telephone between 16th and 18th April 2010.

The ComRes poll also discovered that the overwhelming majority (62 per cent) believed that the next Government should use the tax system to encourage people to invest in private pensions. While 51 per cent thought the next Government should cut the amount spent on public sector pensions, where the UK’s liabilities are estimated to be £1.071 trillion1. ‘Public sector pensions are projected to grow more quickly over the next twenty years than any other area of state spending for which long-term projections are available’, according to the Pensions Policy Institute2.

As one of the largest private client investment managers and pension advisers in the UK, Brewin Dolphin has for sometime been raising concerns with Government and the opposition about the diminishing value of private sector pension provisions, however, this poll shows clearly that none of the parties have managed to reassure the public on this vital issue. As part of its campaign for pension reform, Brewin Dolphin recently launched the UK’s first pension calculator at www.pensionstimebomb.com , which enables individuals to calculate the impact on their pensions of the removal of the tax credit on dividend income introduced in the 1997 Budget. So far over 4000 individuals have used the pensions tax calculator to work out how big the shortfall in their own pension arrangement is.

Charlotte Black, Head of Corporate Affairs at Brewin Dolphin said, “The main parties’ Manifestos3 have not satisfied the public’s need to know how they propose to tackle Britain’s Pension Timebomb and further clarification is obviously required. We want to see the right policy measures introduced to restore individuals' faith in saving for retirement, and we want the next Government to stick to the policy throughout the next Parliament – to create more certainty and confidence for savers and investors and support the re emergence of a savings culture."

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For further information please call Charlotte Black on 0845 213 3331



The Manifestos - what will they do for pensions and savings?


Charlotte Black, Head of Corporate Affairs at Brewin Dolphin commented,

“As one of the largest private client portfolio managers and pension advisers in the UK, Brewin Dolphin has been growing increasingly anxious about the state of Britain's diminishing financial security in retirement. Consequently over the past two years we have been raising our concerns at Government level, highlighting the major issue of pension shortfall being faced by many Britons. To demonstrate our ongoing commitment to this major issue we recently launched the UK’s first pension calculator at www.pensionstimebomb.com which enables individuals to calculate the impact on their pensions of the removal of the tax credit on dividend income introduced in the 1997 Budget. Within a week of launch the Pensions Calculator received over 4,000 visitors who entered their pension details into the calculator and found out for themselves the impact on their own pension savings and how much more they will now need to save to make up the shortfall, or indeed how much longer they may have to work in order to achieve the pension pot they aspired to before the tax change.

We will continue to raise awareness among investors about this issue to ensure that they continue to challenge MPs and candidates from all parties during the General Election about Britain's dwindling pensions. This week's Manifestos have to some extent addressed the issue as we have seen the three main parties outline how they propose to tackle Britain’s Pension Timebomb. However it is still early days and some of their election promises simply do not stack up. We want to see the right policy measures introduced to restore individuals' faith in saving for retirement, and we want the next Government to stick to the policy throughout the next Parliament – to create more certainty and confidence for savers and investors and support the re emergence of a savings culture."

  • The Labour Manifesto clearly states that the party 'will continue to make pension saving more attractive for individuals through favourable tax treatment' but we are concerned that many Britons now face a Pensions time bomb - an ageing population with diminishing financial security in retirement - as a result of the removal of the tax credit on dividend income by Labour in their 1997 Budget. The Labour Manifesto needs more clarity about what the Party means by 'favourable tax treatment', as other than to re state its commitment to NEST*, we can see nothing new. (*National Employment Savings Trust – previously known as Pension Accounts)
  • Brewin Dolphin welcomes The Conservative's aspiration to restore the value of dividend tax credits - “When resources allow, our ambition is to start to reverse the effects of the abolition of the dividend tax credit for pension funds." It is also reassuring to hear that an incoming Conservative government would work with the trade unions, businesses and others to address the growing disparity between public sector pensions and private sector pensions, while protecting accrued rights. They also pledge to end the annuity at 75 requirement; to stop the spread of means testing and to look at how they can simplify the rules and regulations round pensions, which would he hugely welcome by both savers and their advisers. However, we do call on the Conservatives to have more clarity about how they would encourage wider savings and ISAs in particular.
  • On pensions, the Liberal Democrats said they would immediately restore the link between the basic state pension and earnings, and increase the state pension annually by whichever was the higher of growth in earnings or growth in prices or 2.5%. They would also scrap the age 75 compulsory annuity rule and give people ‘greater flexibility in accessing part of their personal pension fund early, for example to help in times of financial hardship.’ However, the proposal we are most concerned about is to reduce tax relief for all pension contributions to the basic rate – removing incentives for many tax payers to save into pensions.

Jamie Matheson, Brewin Dolphin’s Executive Chairman said “Britain is effectively sitting on a pension’s timebomb – an ageing population with diminishing financial security in retirement. The long term costs the country will bear as a result of Britain’s pension deficit will dwarf the estimated £5 billion a year raised by abolishing the dividend tax credit in 1997. ”

Richard Harwood, Divisional Director of Pensions at Brewin Dolphin said "The past 20 years have seen it become easier to borrow money than to save; this spend now pay later approach combined with the reliance on residential property, has had a desperate effect on pension savings at just the wrong time in the cycle. The next Government urgently needs to address this.”

Charlotte Black Head of Corporate Affairs at Brewin Dolphin said “By the end of last year nine out ten final salary pension schemes had been wound up . We are anxious to raise awareness among investors and to encourage them to challenge MPs and candidates from all parties during this Election campaign, about their manifesto proposals to tackle Britain’s Pension Timebomb and then to stick to the policy throughout the next Parliament – to give us some certainty and confidence about the advice we give to investors.”

For further information please contact Charlotte Black, Director Corporate Affairs on 0845 213 3331 or Richard Harwood, Divisional Director, Financial Planning on 0845 213 4773

1 Association of Consulting Actuaries January 2010



NOTES TO EDITORS

The Brewin Dolphin Group manages over £21 billion of funds for over 130,000 private clients and of this over £12 billion is on a discretionary basis. BD has 40 offices throughout the UK and Channel Islands and Brewin Dolphin Investment Banking is corporate adviser to over 100 small and medium size quoted companies and institutions.

Brewin Dolphin Limited (“BD”) is the principal operating company of Brewin Dolphin Holdings PLC which is a FTSE 250 company. BD is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange.

The Group provides a complete investment management and financial planning service for private investors, charities and pension funds and has an Investment Banking division. Stocktrade is the Group's Execution-Only telephone and on-line dealing division.

Brewin Dolphin won the award for the Best Discretionary Broker in the Shares Awards 2009 and also received the top awards for its Market Newsletter and Exceptional Performance in the Back Office at The Daily Telegraph wealth management awards 2009.

The views expressed are not necessarily held throughout the Brewin Dolphin Group.

Please see the Media Centre section on our website: http://www.brewindolphinmedia.co.uk/brw/media/ for details and photos of all commentators and analysts throughout the BD Group.



Brewin Dolphin launches UK’s first calculator to gauge impact of Britain’s Pensions Timebomb


Brewin Dolphin, one of the largest private client portfolio managers and pension advisers in the UK, today launches the UK’s first pension calculator at www.pensionstimebomb.com enabling individuals to calculate the impact on their pensions of the removal of the tax credit on dividend income introduced in the 1997 Budget.

Brewin Dolphin realised that many savers in pension schemes were oblivious to the impact of the removal of the tax credit on their own savings and therefore have developed this ‘Pensions Timebomb’ tool kit. This enables individuals to calculate their pension shortfall and help understand their options for making up the difference to their eventual pension pots.

The calculator reveals some alarming figures. For example it suggests that a saver in their mid 40s may have to work and save for an extra 20 months or increase their investment by around 28 per cent from today until they retire. The calculator does not claim to give an accurate valuation of investors’ pension pots but an approximation of the scale of the problem and these are significant numbers. The sooner investors are aware and take advice, the better chance they will have to fill the hole.

"Britain is effectively sitting on a pension's timebomb – an ageing population with diminishing financial security in retirement. The long term costs the country will bear as a result of Britain’s pension deficit will dwarf the estimated £5 billion1 a year raised by abolishing the dividend tax credit in 1997. Brewin Dolphin has been calling for the restoration of the tax credit for a long time and now urges all the political parties to set out their long term proposals to address the pensions crisis." said Jamie Matheson, Brewin Dolphin's Executive Chairman.

Charlotte Black Head of Corporate Affairs at Brewin Dolphin said “At the end of last year nine out 10 final salary pension schemes had been wound up1 and savers in the private sector have been increasingly switching into money purchase pension schemes. We are anxious to raise awareness among investors and to encourage them to challenge MPs and candidates from all parties during the General Election, to set out clearly what their policies will be to tackle Britain’s Pension Timebomb and then to stick to the policy throughout the next Parliament – to give us some certainty and confidence about the advice we give to investors.”

Richard Harwood, Divisional Director of Pensions at Brewin Dolphin said "The pension shortfall that millions are now suffering highlights the need for long term political consensus. As things stand, advisers can make recommendations about how best to address any shortfall through, contributions and underlying investments. But it is vital that the tax treatment is made more attractive if individuals are to be encouraged to properly address under provision. At the moment we find ourselves in the extraordinary position of advising some clients not to invest any more in their pension fund at all."

Please give us your feedback on these issues or request further information about Brewin Dolphin and our pension and investment services

1 Association of Consulting Actuaries January 2010

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