Pensions are complex, costly and long-term. Individual Savings Accounts are simple, cheap and short-term. So you can see why the National Association of Pension Funds reckons a shift to ISA-style taxation would be a bad idea. The existential threat to their club is obvious.

The Centre for Policy Studies proposed that we steer out of the shark-infested shoals of the rules on pensions to the calm waters of ISAs by scrapping the tax relief on contributions. Since this relief is worth £30bn a year, it’s no wonder the chancellor paid attention. He’s called for submissions, and the NAPF has responded by trying to hit him where it hurts. Far from bringing him more revenue, it argues that a switch would cost the exchequer money.

This is a neat piece of lobbying. Pension contributions  have long been a routine tax avoidance device for the better paid, who get most of the relief thanks to their higher income tax rates. More fool them, implies the NAPF. It’s a “myth” that higher rate taxpayers do better, because they pay more income tax when they retire.

This may be mathematically demonstrable, but presupposes that the affluent elderly consume their pension pot. It is hard to keep up with the recent rule changes here, but a personal pension fund is currently a fine way to pass assets on to the next generation. Myth or not,  “the game is up for higher-rate tax relief,” reckons Tom McPhail at Hargreaves Lansdown.

The NAPF claims to represent schemes providing pensions for 17m people. In practice, it’s a trade body for the managers of the 1,300 schemes. Of course, fund managers also charge for managing ISAs, but the transparency makes it easier to see them at it, and the money isn’t locked away for decades in impenetrable vaults of jargon and tax rules. ISAs are surely the future. Pensions really are past it.

Papering over the (runway) cracks

This week promises to be an exciting one in the London airports hot air business. This valuable industry has provided gainful, and not too stressful, employment for thousands over the years, and if all their reports were laid end to end, they’d form a new runway at Heathrow.

To add to the pile, here comes the “statement of principle” from Gatwick and the pair of Heathrow schemes, detailing exactly what each wants to do, and how they’d do it. By December, having chewed this paperwork, the government promises to make a decision.

However, those in the airports hot air business need not fear for their next consultancy. The decision is not whether and where to build,  but a decision on what to do next after considering the report from the Airports Commission. Howard Davies, its former chairman, may have a new job at Royal Bank of Scotland, but that didn’t stop him slapping down the Gatwick Airport boys last month.

They seem to be losing the battle, but it’s probably a phoney war like all the other runway scraps. All the leading candidates for next year’s London Mayor say they are opposed to Heathrow expansion, so the political price of approval looks too high. Thus does one of the very few multi-billion pound infrastructure projects that makes economic sense get postponed indefinitely.

Snouts in the trough

By some recent standards, the backers of the Peppa Pig rights issue have been positively restrained in taxing the shareholders of the pig’s distributors, Entertainment One. Chunky offers like this four-for-nine issue often come to fund “transformational” deals, usually shorthand for expensive forays into poorly understood business models.

In this case the £195m net proceeds are to add ownership of the piggy to the existing distribution, the sort of sensible deal that can clearly add value, which perhaps explains the relatively lower cost of the fund-raising. Even so, in return for the risk that the share price will collapse from 272p last Wednesday to below 150p on October 18, the promoters and underwriters share £7m. So far, the price has slumped all the way to 260p. So only another 110p downside for the risk-takers, then. Oink oink.

This is my FT column from last Saturday.

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