Ian Neale looks at what legacies mean for the pensions industry.

Charities love 'em, even depend on them. Increasingly, so do today's retirees.

People feel warm towards legacies. Some politicians, it is said, care very much about their legacy, at least in the sense of what people will think of them after they've gone. It might not be positive.

Past governments have bequeathed a welter of legacies to the pensions industry.

Some have been enduring, like preservation – if you left your job before 1986 after less than five years you usually lost any occupational pension scheme rights that went with it, welcomed by employees though not so much by employers, but long since accepted.

On the tax side, changes have been increasingly unwelcome by all parties, except HM Treasury.

Leaving aside the so-called 'pension freedoms,' of which I will get to later, practically every year a new cohort of pension savers has been created.

New rules might not affect them, more accurately; some of the new rules might not affect some of the existing scheme members.

As the years have passed, more and more sponsoring employers who generously set up pension schemes decades ago have been subject to takeover, merger or insolvency.

Consider the constituents of the FTSE100 Index – of the original 100 companies listed in 1984 only 31 were left in 2006 when the new pensions tax regime took hold, remember General Electric? ICI?

The companies might have gone, but the pension schemes are still around. Most have several sections following mergers and acquisitions; many with sub-sections or member classes too corresponding to step changes in legislation. And let's not go into contracting-out.

In the insurance sector the same sort of thing has happened, but in spades. Look at the history of any of the leading life offices today.

Aviva plc, for example, subsumes 372 companies; Legal & General 146. Many of these companies wrote retirement business. I was staggered to learn recently that one life office recently had nearly nine hundred different 'products' related to retirement.

Some of these contracts – for that is what they generally amount to, in law – were written forty or more years ago; in some cases even before the advent of mainframe computers, let alone the PC or the web.

All have their own terms and conditions, based on the law at the time they were written. The more recent will be supported by IT systems, which themselves might easily be thirty years old.

How many people who understand these systems and the contracts they support are still around? Scarce commodities increase in value according to their rarity.

Often; however, the income to match is not accruing. It becomes increasingly costly just to maintain these ancient systems and products.

But, a contract is a contract; woe betide anyone seeking to unilaterally revoke an insurance contract (without, dare I say, a bevy of very expensive lawyers at their side).

Sometimes, as the current controversy around the valuation of Guaranteed Annuity Rates (GARs) illustrates, what had been considered a term unlikely ever to be invoked comes back to bite the progenitor.

The 'pension freedoms' set in motion by the 2014 March Budget have certainly revived popular interest in pensions (just before the mortuary door, some might say), if only among those seeking to liquidate.

The Chancellor waved his magic wand, but it didn't quite work. Not all pension providers immediately fell into line and offered what he suddenly permitted.

Naughty, naughty, said new Pensions Minister Ros Altmann. Some providers, mentioning no names, but clearly with certain insurers in mind, didn't 'get it.' Veiled threats were aired.

Now this, we thought, was a Pensions Minister who had a good grasp of pensions; someone who had worked in various sectors (chiefly investment) during a career of well over twenty years.

How well does she understand the legacy landscape though, and the true complexity of pension provision, particularly in the insured sector? Ros would be the first to say the insurance industry has a lot to answer for, with an army of admirers right behind her. But does she really think they are all bad?

Legacies can be gifts bequeathed or millstones around the neck of the inheritor. Sometimes we all need a little help from the law.

Written by Ian Neale, Director, Aries Insight.