On the go: The Investing and Saving Alliance is calling on regulators and the government to reform pension decumulation policy that will impact four main areas.

The cross-industry membership body is putting these requests directly to the Financial Conduct Authority, the Pensions Regulator, the Department for Work and Pensions, HM Revenue & Customs and HM Treasury to enhance consumer retirement outcomes.

This includes a call for the money purchase annual allowance limit to be “levelled up” to the previous limit of £10,000.  

Tisa is calling for this MPAA change to reflect the different environment retirement savers now face, in contrast to 2017 when the £4,000 limit was introduced.

Doing so will help savers avoid incurring tax bills for investing for their retirement, with change necessary as auto-enrolment has increased contributions, while Covid-19 has impacted working patterns and withdrawal behaviour, it argued.

Tisa is also calling for block transfer rules to be abolished by HMRC. The organisation said that anyone with a protected retirement age or protected tax-free cash pension is restricted from utilising pension flexibility as a result of these rules. 

Currently, an inconsistency exists in the block transfer rules. In the finance (no.2) bill, easements are proposed for those who hold the new 2021 protection, but this does not extend to other forms of protection.

The industry body wants a more consistent approach, contending that current requirements can have an adverse impact on value-for-money consolidation exercises. 

“Unlike accumulation where the main beneficial objective is to create a pension pot as large as possible, decumulation is a much more personalised journey specific to individual circumstances,” said Renny Biggins, head of retirement at Tisa.

“We are not calling for wide-scale reform with this particular set of proposals, but would like some enhancements made to the existing framework to reflect the significant shifts we have seen since these rules were originally introduced.”

The two other areas of Tisa’s requests concern regulatory alignment and updates to PAYE processes.

The industry body is calling for trust-based defined contribution wake-up packs to be aligned with FCA requirements to create consistent communications. This will include the addition of life expectancy to be covered, with a reference to the Office for National Statistics calculator.

Tisa hopes this will prompt individuals to consider how long their retirement may be, and potentially help pre-empt longevity risk they may be underappreciating.

Reforms around current PAYE processes are being called for to improve transparency around pensions. To do this, Tisa is urging HMRC to use dynamic coding for pension withdrawals and ensure tax deductions are made to avoid large-scale overpayments. 

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