It is exactly 20 years since pension rules were radically overhauled in the UK. This revolution was supposed to make pensions simpler and more streamlined, but ministers have not stopped tinkering with them since.<\/p>\n
Money newsletter<\/p>\n
The latest personal finance and investment news from our money team.<\/p>\n
\t\t\t\t\tSign up with one click<\/p>\n
On April 6, 2006, \u201cpension simplification\u201d swept away eight fragmented tax regimes that covered occupational and personal pensions, replacing them with a single set of rules. It created the same lifetime and annual allowances across the board, which determined how much money someone could pay into their retirement pot and benefit from tax relief.<\/p>\n
However, since this landmark day, the system has been watered down with more than 30 changes, with experts suggesting this has rocked savers\u2019 confidence.<\/p>\n
Zoe Alexander from the industry body Pensions UK said that some of the reform, such as auto-enrolment, \u201chas been both necessary and welcome\u201d. But she added: \u201cThis has too often been accompanied by frequent tax tinkering and short\u2011term policy changes, which create uncertainty and complexity for savers and employers alike.<\/p>\n
\u201cThe clear lesson is that while thoughtful reform strengthens the system, constant chopping and changing risks eroding trust.\u201d<\/p>\n
\t\t\t\tSome of the tinkering since 2006\t\t\t<\/p>\n
Ten changes to the lifetime allowance. This had been capped at \u00a31.073 million, but has now been scrapped.<\/p>\n
Nine changes to the annual allowance. This is \u00a360,000 but has been as high as \u00a3215,000.<\/p>\n
Six changes to the tapered annual allowance, which reduces your annual allowance once your income exceeds \u00a3200,000 a year.<\/p>\n
Three changes to the money purchase annual allowance, which allows you to carry unused annual allowance from previous tax years.<\/p>\n
Seven transitional protection regimes, for those who had built up benefits before new rules came into force.<\/p>\n
Auto-enrolment in workplace schemes was introduced in 2012 and, says Alexander, was \u201cgenerationally transformative\u201d. This paved the way for pension freedoms in 2015, which allowed savers to flexibly access their retirement pots instead of having to buy an annuity.<\/p>\n
Changes in 2015 also allowed beneficiaries of someone who died before the age of 75 to inherit their entire pension pot tax-free.\u00a0<\/p>\n