A strong pensions sector is key to a strong economy and the Pensions and Lifetime Savings Association (PLSA) has outlined its six priorities for pensions in the upcoming general election:
State Pension – The State Pension, set at its current value relative to average earnings, is affordable without further increases to the State Pension age. The triple lock has been valuable in raising the relative incomes of pensioners but, if it is maintained in future, it will add around 1% of GDP to the cost of the State Pension. A simpler, fairer and more affordable uprating mechanism should be introduced, linking to earnings growth, enabling the State Pension to keep pace with working age incomes, with a floor to protect against any periods when wages fall. Indexing in line with earnings will allow the State Pension to maintain its current value of around 30% of average earnings.
Automatic Enrolment - Automatic enrolment will deliver a real improvement for millions of people’s retirement incomes and the Government can build on this success. To do this, it is essential that minimum overall contributions increase to at least 12% of salary by 2030, with steps taken now towards this goal. The Government should also extend automatic enrolment to include 18-21 year olds, self-employed people and those in multiple jobs paying low salaries totalling £10,000 or more.
Defined Benefit - The UK’s DB pensions are underfunded, with around three million people having only a 50:50 chance of seeing their benefits paid in full. The Government should bring forward legislation to reduce burdens and enable pension schemes to share services or to merge, delivering better returns, saving money and improving governance. This will mean a greater chance of members receiving their benefits. It will free employers to focus on corporate growth and it will return public confidence to the system.
Pension Scams - Pension scams damage people’s retirement incomes. Under current law, the scheme trustees are powerless to stop the transfer even if they have grave concerns about the risks to the member involved. To protect people from pension scams, legislation should be introduced to establish an authorisation regime for pension schemes. An individual would only have the right to transfer to an authorised scheme.
Help at Retirement - Decisions made at retirement are some of the most important, yet difficult, decisions to make. The Government should make it easier for trustees to signpost good quality and good value schemes or products. This will ensure that those who are unwilling or unable to make a choice have their interests safeguarded.
Tax Relief - Savers must continue to be incentivised to save, and any tax reform should harness incentives to save, not remove them. Further piecemeal cuts will undermine the stability of – and public trust in – the system of pensions tax relief. The Government should instead undertake a thorough, independent review of tax and incentives to save in order to seek sustainable solutions which continue the alignment of Government (both current and future), savers, employers, industry and broader society which has driven the success of automatic enrolment so far.
Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association, said:
“Over the last two years, a significant amount of work has been done to ensure the continued momentum of automatic enrolment and to help extend workplace pension saving to more people than ever before. We have also seen a welcome recognition from Government of the need for action on Defined Benefit pensions.
“The next Government needs to consolidate the growth of workplace pensions, increasing the reach of automatic enrolment and setting out a plan to raise contribution rates. It also needs to make it easier for schemes to make Defined Benefit pensions sustainable.
“Above all, it needs to build public confidence in the system, helping the industry fight scams and deliver the retirement choices savers want, while resisting the temptation for further raids on the pensions tax relief piggybank.”
The full text of the ‘Priorities for Pensions – A manifesto for Government’ – can be found here.
NOTES TO EDITORS:
ABOUT THE PENSIONS AND LIFETIME SAVINGS ASSOCIATION
We’re the Pensions and Lifetime Savings Association; the national association with a ninety year history of helping pension professionals run better pension schemes. Our members include over 1,300 pension schemes with 20 million members and £1 trillion in assets, and over 400 businesses. They make us the voice for pensions and lifetime savings in Westminster, Whitehall and Brussels.
Our purpose is simple: to help everyone to achieve a better income in retirement. We work to get more money into retirement savings, to get more value out of those savings and to build the confidence and understanding of savers.
Lee Blackwell, Interim Head of Media & PR, Pensions and Lifetime Savings Association
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Babak Mayamey, Press Officer, Pensions and Lifetime Savings Association
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Kathryn Mortimer, Press Officer, Pensions and Lifetime Savings Association
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