2016 – Robo Advice arrived, EValue went purple and more!
From the sudden death of iconic global popstars such as David Bowie and Prince to Brexit, Donald Trump’s unexpected election win and the rise of national populism, 2016 has seen some notable changes.
The financial services industry as a whole and EValue, in particular, have not been immune to such worldwide trends, as 2016 heralded in some big transformations for both.
What actually happened?
Following a seven month review, the Financial Advice Market Review (FAMR), jointly launched by the Financial Conduct Authority and the Treasury in August 2015, published its final report in March 2016 making 28 separate recommendations.
One of the FAMR’s greatest concerns is that not all consumers are able to access the advice they need at a price that they are willing or able to pay. The review, therefore, made a number of recommendations intended to allow firms to develop more streamlined services and engage with customers in a more effective way.
To make financial advice and guidance more affordable for consumers, FAMR also proposed that the government should consult on changes to legislation in order to narrow the definition of regulated advice so that it is based on a personal recommendation. This consultation is now closed and we await the government’s response in due course.
In April 2016, the new State pension was launched. Although intended to simplify matters there are some complicated transitional arrangements currently in place!
Also from April 2016, the lifetime allowance for the 2016/17 tax year was reduced to £1 million from £1.25 million which, according to the government, supports their objective of a system of pension’s tax relief that is fair, affordable and sustainable. In addition, from April 2018, the lifetime allowance will be indexed year on year in line with the Consumer Price Index.
But, these scheduled changes were only the tip of the iceberg. Other, more unforeseen, changes were silently lurking beneath the surface.
In a surprise, but well publicised move, George Osborne failed to implement the much vaunted review of the pensions’ tax system in his March budget.
Although concerned that the complexity of the current tax relief system is currently undermining the incentive for individuals to save into a pension, the then Chancellor concluded that this year was not “the right time”, with uncertainty in the global economy and reforms such as auto-enrolment still bedding in, to “turn things on their head.”
In October, the proposal to set up a second hand annuity market was scrapped. In a statement, the Treasury said that “the consumer protections required could undermine the market’s development.” This decision was largely welcomed by the industry as a whole, due to the myriad of complexities involved.
Then came Phillip Hammond’s first, and last, Autumn statement in which he issued a seemingly veiled threat over the continuation of the triple lock after 2020 but was more direct in his policy to reduce the Money Purchase Annual Allowance to £4,000 from April 2017, in an attempt to remove double pension tax relief, such as relief on recycled pension savings. The government has issued a consultation paper on the detail of this proposal which is due to end on 15th February 2017.
EValue has not been resting on its laurels. 2016 saw a complete rebranding of the company and the unveiling of a new, intuitive and engaging website.
Through the successful launch of our robo advice solution and thought provoking white paper in October, EValue aims to help the financial industry in effectively harnessing technology to engage consumers with their finances and encourage and compel them into taking appropriate and timely action.
Pension Freedoms has also not been forgotten, following its introduction last year. The big change from EValue’s point of view was the launch of our Flexible Retirement Options tool in December This enables members of Defined Benefit (DB) schemes, aged 55 or over, to fully explore and compare their retirement options if they were to transfer out their final salary benefits to a separate Defined Contribution arrangement in order to take advantage of the greater flexibility inherent under pension freedoms.
But surely one of the year’s greatest surprises, from EValue’s point of view, was that we won our first ever charity football match against AML Digital Agency raising £835 for Shelter. All we can say is - expect the unexpected!
What is likely to happen in 2017?
Our industry has again seen some unprecedented, if not altogether anticipated, changes over the past year. Global and domestic politics together with further legislative changes mean that 2017 is set to be yet another busy year in the world of pensions. As well as the introduction of the new LISA from April 2017, further enhancements to robo advice, the setting up of a new pensions dashboard and potential reforms to the State Pension Age post 2028 are also in the pipeline.
During these times of increasing uncertainty in domestic and global markets and continuous industry developments, EValue’s enduring aim is to provide insight that enables individuals to make the best financial decisions they can. After all, as the lyrics of the late David Bowie’s famous song, “Changes”, states “Ch Ch changes, turn and face the strange…I watch the ripples change their size, but never leave the stream of warm impermanence.”
May we wish you a Merry Christmas and a very Happy New Year.