Cloud cuckoo pensions
FROM ownership of shares turn to own- ership of pensions. Here the Chancellor, in what was otherwise an intentionally boring Budget, conjured up two major reforms, for the 11 million people now in occupa- tional pension schemes and for all the millions who may follow them in. He brought forward to next New Year's Day their right to opt into personal and port- able pension schemes. He also gave those in occupational schemes a new right over the top-up payments which they are allowed to make towards their own pen- sions — in the jargon, Additional Volun- tary Contributions. These AVC payments, he announced, need no longer disappear into the pot of the pension fund and lose their identity within it. Instead, they could represent a separate supplementary pen- sion arrangement, with no loss of tax advantage, but within the individual's own- ership and control. Now the Treasury has had to put back personal pensions, by six months, until such time as the Securities and Investments Board's labyrinthine new arrangements for authorising the pension- management companies have some chance of being in place. These, though, do not inhibit the AVC schemes, which, more complex than most personal pension schemes, might have been thought to require more protection for investors. The new AVCs are allowed to go ahead next month. Most of them will not. The Inland Revenue has insisted that final benefits should be limited by ratio to final salary, and the pension companies rightly say that this asks them to forecast the unknowable. The biggest mutual life assurer has decided not to try. A competitor sympathises: 'I cannot imagine a more cloud cuckoo land situation.' A pity to maroon genuine popu- lar capitalism in cloud cuckoo land.
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